Consideration is what binds one party to another in a contract. This means that each party must give something in return for what is gained from the other party. Consideration may be a thing or service.
Many of the problems concerning consideration arise not when the contract is made, but when one or other party seeks to modify it – such as paying a lower price than the agreed. A promise to accept such a modification was traditionally not binding unless supported by new considerations, but recent cases have changed the rules in such situations.
Consideration is usually said to be something that represents either some benefit to the person making a promise (the promisor) or some detriment to the person to whom the promise is made (the promise), or both. In Currie v Misa (1875) it was stated that consideration existed when there was 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.
In Dunlop v Selfridge (1915) the House of Lords explained consideration in terms of purchase and sale. The plaintiff must show that he or she has bought the defendant’s promise, by doing, giving, or promising something in return for it.
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