Hi, you're listening to the Australian Law Student Law Infor podcast, your go-to podcast
for legal insights in four minutes or less.
I'm Nick Hodgkinson, and today we're talking about consideration.
But first, our obligatory disclaimer.
The Law Infor is produced by law students for law students.
It is not, nor is it intended to constitute, legal advice.
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Okay, consideration.
It's our second episode on contract law.
Consideration is the lifeblood of contracts and encompasses a benefit, detriment, performance,
or forbearance voluntarily incurred and ancillary to a promise.
Without consideration, a promise becomes a mere nudum pactum and is devoid of legal force.
However, you should note that consideration is not...
required if the promise is made under seal or deed.
Right, let's explore two approaches to understanding consideration.
The benefit-detriment approach understands that the primacy must either confer a benefit
on the promisor or incur a legal detriment by surrendering or foregoing something.
This concept is illustrated in Beaton and McDivitt, where consideration involves either
a benefit accruing to one party or a detriment being suffered by another.
The alternative approach is the quid pro quo.
Bargain approach, where the bargaining promise must be made quid pro quo with the act constituting
It's performed in reliance on a promise will give rise to an estoppel, as demonstrated
in Australian woolen mills and commonwealth.
Courts will typically refrain from assessing the adequacy of consideration, except where
it is illusory, as seen in Woolworths and Kelly.
Past consideration given prior to a promise isn't good consideration, as established
in Roskola and Thomas.
The existing legal duty rule often surfaces in contract modifications, where fresh consideration
is required to enforce a modified agreement, and you should refer here to Stilk and Myrick.
There are, however, a handful of exceptions to this existing legal duty rule.
For example, if fresh consideration is provided for the fresh promise, the modified agreement
becomes enforceable, per Hartley and Ponsonby.
Second, a practical benefit obtained by modifying a promise to pay more for the beneficiary's
original performance under the original contract will also constitute good consideration, as
exemplified in Williams and Roffy Bros and Nichols contractors.
Conversely, practical detriment incurred by modifying a promise to accept less than the
beneficiary's original performance is also considered good consideration, as in Musumeci
Promises to third parties, bona fide compromises, and part payment of a debt will all have their
exceptions to the existing legal duty rule, and this showcases the nuanced nature of
And there you have it, a comprehensive exploration of consideration in four minutes or less.
Join us next time on the Australian Law Student Law In 4 podcast.
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