Distinction between executed, executory and past consideration.

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 Distinction between executed, executory and past consideration. Under what circumstances may ‘past’ consideration be enforced? with decided cases and statutory provisions, let’s provide solution to this. 

In as much as something of value of the law must be enough to constitute consideration, it is equally important to understand the time and manner in which such consideration is furnished so as to prevent discrepancies in the initiation of a binding contract.

Consideration is popularly construed to be Executory when in the creation of the contract, the correspondences between the contracting parties have no more than exchange of promises which would be fulfilled at a later time. The promises to be fulfilled in future is seen as the Executory consideration. The whole transaction remains in the future, a tender submitted by a contractor for the building of a house which is subsequently accepted by the person who wishes to build a house is a practical example of an Executory consideration/Bilateral Contract. McDonald v. Hewett

Accordingly, consideration is said to be Executed when an act is performed in return for a promise. The act performed for the promise is the Executed consideration in which case the consideration has already been executed in the act. A promise of reward to anyone that will perform a particular act will be seen as an Executed consideration/unilateral contract. Thus in Carlill v Carbolic Smoke Ball Co, The Court held that by the terms of the contract her actions constituted the acceptance and of course the consideration. There was no need to notify the company about her willingness to accept. Another example of executed consideration seen in reward form can be cited in the defective case of Gibbons V. Proctor. 

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Consideration is then said to be Past if the act or promise was made prior to a contract. Such act or promise cannot be a basis to enforce a future promise. In the case of Re Macardle It was held that the prior furnishing of the building where the children of the testator to the house stayed by the wife and one of those children was a past consideration in respect to the later promise to pay her £488, and thus invalid . Thus in Akenzua II, Oba of Benin v. Benin Divisional Council The plaintiff’s influence of persuasion to the African Timber and Plywood Co. to release some forest areas to the council as gesture of goodwill was held not to be a valid consideration for the latter promise to release one of the areas to him for his exclusive exploitation. Thus, when the promise was rescinded and the plaintiff sued, the court could find no fresh consideration furnished for the latter promise, seeing that the initial influence of persuasion was a past consideration.

The first exception to this rule was the erroneous contention that a prior request by the promisor to do some service for him makes the consideration valid even before the actual promise. Thus is the case in Lampleigh V. Brathwait the plaintiff having helped the defendant get a free pardon from the king for his (the defendant) offense on his request prior to the promise of payment, the court held the plaintiff to have finished a valid consideration for the contract enforcement. On the ground that the prior request and the subsequent promise were to be treated as one transaction. This deviating idea was questioned in the case of Kennedy v. Broun. Erle CJ, tilted the erroneous interpretation of Lampleigh v Brathwait to a more popular principle stating that a past service performed at the request of the promisor will only amount to consideration “if it was assumed at the time that the service was ultimately to be paid for”. This principle got a strong backing by the Privy Council in Pau On v. Lau Yiu Long when Lord Scarman stated the correct position as follows

“An act done before the giving of a promise to make payment or to confer some other benefit can sometimes be consideration for the promise. (1)The act must have been done at the promisor’s request; (2)the parties must have understood that the act was to be remunerated whether by payment or the conferment of some other benefit; (3)and payment, conferment of benefit must have been legally enforceable, had it been promised in advance”

Another essential case is ReCasey’s Patents, Stewart V. Casey 

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Finally in section 27(1) (b) of the Bills of Exchange Act 1882, it is provided that the valuable consideration for a bill may be constituted by “(b) an antecedent debt or liability”. 

An executory, executed and past consideration can be seen in the light of the “future – present – past” narrative respectively, the Executory consideration to be finished at a later time, the Executed furnished at the instance of entering into the contract, and the Past furnished even before the promise is made in which case it is not an acceptable form of consideration.

 

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2 Comments

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