Doctrine of adequacy and sufficiency
Doctrine of adequacy and sufficiency
This essay critically explores the doctrines of consideration and sufficiency within the context of contract law, with references to the matter of Thomas v Thomas from 1842. In assigning significance to these matters, it is noted that Sir John Patteson, a judge in 1830 who was appointed to the Court of King’s Bench, (later the Privy Council) was knighted shortly after making the landmark decision regarding the doctrine of consideration in the case of Thomas.
The ratio decidendi in Thomas, was ‘[c]onsideration must be of value and involve benefit or detriment’ postulating further that ‘although consideration must be sufficient, it need not be adequate. ’ CONSIDERATION Eleanor Thomas sued the executors of her husband’s estate where the court ruled the agreement entered into, was neither nominal nor a voluntary gift, but sufficient in consideration.
Consideration is the intention to create legal relations through a bargaining process affording a mutual exchange of a promise for a promise. In Beaton v McDivitt, it is evident that if a transfer was a gift, the essential component of bargaining would be absent. Consideration must be quid pro quo and result in a transfer between the promisor and the promisee, and result in the creation of a relationship of cause and effect. Only the parties involved can enforce the agreement.
Consideration may also be a promise to refrain from doing something as Lush J in Currie v Misa states, ‘a valuable consideration, in the sense of the law, may consist in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility, given, suffered, or undertaken by the other. ’ Consideration can involve the forbearing to sue even if the case is unfounded. Past consideration may be valid where it was preceded by a request, however services that would not have been performed but for the implied promise of payment amounts to good consideration. WHEN CONSIDERATION IS NOT CONSIDERATION
Consideration may be invalid as in Jones v Padavatton where under the doctrine of presumption, arrangements between family are not binding. Salmon LJ in Jones, in the dissenting obiter dictum, determined that the original agreement created an intention to create legal relations due to the financial consequences of the promise involved, however held there was no binding contract suggesting there was insufficient evidence to rebut the presumption against domestic arrangements. Consideration must be furnished at the time of agreement. Consideration is not valid where a promise to make payment has occurred after the act has been performed.
Bargains and conditional gifts for a person who performs an act is not good consideration, nor is a promise to perform an existing duty, or an existing public duty, except where performance goes beyond required expectations. Illegality in consideration is not enforceable giving rise to the expression ‘ex dolo malo non oritur actio’ meaning ‘[n]o court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. ’ Illusory consideration, where one party’s obligations are amorphous, is not binding. Limitations and exceptions can apply to consideration however, where additional risks are undertaken.
DOCTRINE OF SUFFICIENCY As in Thomas, common law substantially rests on the precept that consideration must be of value to be sufficient, even if it is nominal, without any quantitative economic postulation. Some may suggest such fiscally nominal or token consideration while sufficient, is commercially inadequate in the eyes of a reasonable person, and is itself, illusory. It may be suggested the court has extended itself to invent consideration, where equity may uphold promises not supported by good consideration, through the provision of promissory estoppel.
It is incumbent on the parties only to determine the subjective and adequate worth of a promise. Patteson J articulates in Thomas, ‘although consideration must be sufficient, it need not be adequate. ’ CONCLUSION Blackburn J statement of objective interpretation suggests the objective test must always apply in assessing how a reasonable person would view the situation. It can be concluded that consideration is a matter of essential promissory exchange, while adequacy and value, are the fiscal or functionary exclusive domain of the parties involved. Word count 691