A promise will not be enforceable until it is supported by consideration. "Consideration means an act or promise given in exchange for the promise." A promise to pay more must be supported by consideration since, the factual benefit cannot amount to consideration to accept less. "However, there is some question as to how far it is modified by an equitable principle known as promissory estoppel." Where a promise is not supported by consideration, the promise may be binding under the doctrine of promissory estoppel. Promissory estoppel excludes the general need of consideration within a contract and stops a person going back on their promise. This is to avoid any injustice. This essay will look at how promissory estoppel relates to the doctrine of consideration and whether it overlaps when considering the creditors promise to accept less.
Consideration is where the parties need to promise to do something or give something. The common law helps us understand what amounts to good consideration. A good consideration is if the parties gain a benefit or suffer detriment. There are three element of consideration. Firstly 'consideration must be sufficient but it need not to be adequate.' This is where in the Court need to recognise as the consideration being of something value. Secondly 'past consideration is not good consideration.' Thirdly 'the consideration must move from the promisee'. However after taking into account the doctrine of consideration, we will need to know how much the law protects those parties who rely on their detriment, where there is no consideration involved.
Consideration in many cases has protected parties from promises made in a frivolous manner and its helped to distinguish between binding promises. However it can be argued that these have been undermined as a result of adequate consideration. This is as it cannot be considered a bargain if a promise is enforced in return of nominal consideration. This is seen in the case of Chappell v Nestle where the chocolate wrappers were regarded as being valuable. However it can be seen that consideration is a formality which needs to be fulfilled. It can also be argued that the intention of a party within a contract can be a vague concept leading to uncertainty. However an advantage of the rules of consideration is it allows the party to judge when they have entered into a contract.
However a argument against consideration is that it is parties who are dealing in a reasonable and equitable manner do not need to satisfy consideration. The definition of consideration shows it needs to show a practical benefit rather than a legal benefit. This is seen in the case of New Zealand Shipping v Satterthwaite where it was difficult to establish how Stevedore could benefit from the exemption clause. The court said that the practical benefit of having the goods unloads could provide consideration for collateral contracts. Therefore Stevedore can benefit from the exemption clause. This shows...