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EXISTING DUTIES AND CONSIDERATION Paul Matthews* One of the student's stock problem areas in the law of contract is how far a promise to perform (or actual performance of) an existing duty can be good consideration for a new contract. In recent years this has also become a difficulty for practitioners, particularly in a commercial context, and cases such as North Ocean Shipping v. Hyundai Construction' and The New York Star spring to mind. It is proposed here to offer a brief survey of this area of the law tied to a slightly unorthodox analysis, which, it is submitted, in fact conforms much more closely to the philosophical underpinning of consideration generally than do more orthodox analyses.' Consideration and Exchange Among the products of the empiricist philosophies that have characterised English thought are two that may be thought significant in this area of law. One is that no values are objectively correct." The other is that you should not attempt to cross your bridges before you come to them.' Parallel legal products of the empiricist tradition (which may be thought to have influenced English lawyers as much as any other section of society) are, first, the courts' refusal to mend men's bargains and reliance on the parties' own assessment of value," and, second, the case-law method of developing the legal system piece by piece, like a mosaic." A sub-product of the second, perhaps, has been the notion of freedom of contract; that the parties may agree on whatever they wish, unless or until the courts take the positive step of striking the contract down as contrary to public policy."

* Lecturer in Law, University College London. The writer wishes to thank his colleagues in the I 2 3 4 5 6 7 8

Faculty of Laws, University College London, to whom an earlier draft of this paper was read, for their helpful comments. The writer is, however, responsible for any errors and omissions there may be. [1979J Q.B. 705. 1980 3 All E.R. 257. For which see, e.g., Law Revision Committee, 6th Interim Report, 1937, para 36; C. J. Hamson, "Reform of Consideration", 54 Law Quarterly Review (1938),233,237; and see also K. C. T. Sutton, Consideration Reconsidered, SI. Lucia, University of Queensland Press, 1974,29-33. A modern exposition is J. L. Mackie, Ethics-Inventing Right and Wrong, Harmondsworth, Penguin Books, 1977. E.g. J. Locke, Essay Concerning Human Understanding, Book 2. See text at notes 14-19 below, and also the cases cited below at notes 23 and 24. See the discussion and references collected in A. L. Goodhart, English Contributions to the Philosophy of Law, New York, Oxford University Press, 1949,27-34. P. S. Atiyah, The Rise and Fall of Freedom of Contract, Oxford, Clarendon Press, 1979, passim.

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Perhaps to English lawyers in the sixteenth and seventeenth centuries "consideration" for enforcing a promise simply meant a good reason for doing SO,9 predicating the existence of a moral duty to perform the action promised. 10 In such a context Lord Mansfield's attempts to "reform" consideration into a doctrine concerned with evidencing a promise intended to bind" were hardly to be regarded as heretical, merely wrong in the choice of one interpretation among at least two that were possible of the Statute of Frauds 1677.12 However this may be, what is certain is that, just as empiricist philosophy began to predominate in the seventeenth century, so the notion of exchange crept into the doctrine of consideration. 13 That is not to say that the empiricists "produced" the notion of exchange (or that the classical economists did), but rather that the same ideas which influenced the philosophers (and the economists) were also at work elsewhere in society, including amongst lawyers. At first the exchange was examined for fairness," but statements like that of Hobbes, that' 'The value of all things contracted for is measured by the appetite of the Contractors" ,15 were symptoms of a gradual change in store. Certainly towards the end of the eighteenth century the courts were more and more to be found making general statements such as: I do not agree with those who say, that wherever such an advantage has been taken in the course of a contract by one party over another, as a man of delicacy would refuse to take, such a contract shall be set aside. 16 No doubt the advance towards a general subjectivity of exchange value was made the easier by the increase in cases containing a measure of commercial speculation, so that any objective assessment of value was, to say the least, difficult to achieve." Thus although certain specific cases of oppression or hardship, where the court would set aside an inadequate bargain, remained in the nineteenth century," they were left like whales stranded on the beach of contractual subjectivity. In the nineteenth and twentieth centuries the general principle has been, as Lord Somervell expressed it in Chappell & Co. Ltd. v. Nestle Co. Ltd.: A contracting party can stipulate for what consideration he chooses. A

9 Ibid. esp. at 139-149, referring to A. W. B. Simpson, A History of the Common Law of Contract; Oxford, Clarendon Press, 1975. 10 A promise in itself had no moral force according to the English view. But natural lawyers such as Grotius and Pufendorf took a different view: see e.g., P. S. Atiyah, Promises, Morals and Law, Oxford, Clarendon Press, 1981, Ch. 2. 11 E.g. Pillans v, Van Mierop (1765) 3 Burr. 1663,97 E.R. 1035, overruled in Rann v. Hughes (1778) 7 T.R. 3500., 101 E.R. 1014n; 4 Bro. P.C. 27, 2 E.R. 18. 12 See Simpson, supra note 9 at 617-619. 13 See Atiyah, supra note 8 at 167-180. 14 See the cases discussed by Atiyah, ibid. 15 Leviathan, Part I, Ch. 15,208. 16 Fo~ v. Mackreth (1788) 2 Cox 320 at 321,30 E.R. 148. 17 E.g. Nichols v, Gould (1752) 2 Yes. Sur. 422, 28 E.R. 270. 18 E.g. bargains with heirs and reversioners (Aylesford v. Morris (1873) L.R. 8 Ch. App. 484), or with poor and ignorant persons (Fry v. Lane (1888) 11Ch.D. 312): see R. Goff and G. Jones, The Law of Restitution, London, Sweet and Maxwell, 2nd edition, 1978, Ch. II.

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peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throwaway the corn.'? Consideration and Freedom Given, then, the classical subjectivity of consideration, how might we define it as a substantive concept? In Currie v. Misa the Exchequer Chamber defined it as "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.' '20 Much academic ink has been spilt on the question whether the two parts of the definition are equivalents or alternatives, and if the latter whether (and if so, which) one is the more important." In the present writer's view this is not very sensible. There is a simple way to understand consideration not depending on complex definitions. Consideration can best be thought of in terms of the surrender of small parcels of the individual's freedom. A is free todeal with his goods as he pleases. He promises to deliver them to B, and (if this promise is held binding) pro tanto surrenders his freedom in respect of his goods to B. B now controls this small part of A's freedom. If you like, A is pro tanto B's slave." The policy of the law is that surrender of freedom is only effective (i.e. binding) if accompanied by a surrender of freedom the other way, to balance up. The law says the two parcels of freedom are equal in value because the law allows the parties and not the courts to stipulate their "price": only A knows the value of the satisfaction of his desires, because only A knows the extent and strength of those desires and their priority relative to other desires. As Byles J. said in Shadwell v. Shadwell" in relation to a promise to pay an annuity to the plaintiff, "Marriage of the plaintiff at the (defendant's) testator's express request would be, no doubt, an ample consideration," even though "the testator ... derived ... no personal benefit from the marriage". The only "benefit" for the testator would be the satisfaction of his desire expressed in the request. This is the true consideration." A yet more extreme example is the New York case of Hamer v. Sidway." where a promise to pay $5,000 to the plaintiff if the plaintiff refrained from drinking, smoking, swearing and gambling during a certain period was held

19 [196OJ A.C. 87, 114. This subjectivity has striking parallels elsewhere in the common law, notably where a plaintiff seeks payment for services performed for the defendant's "benefit", but not at his request: see P. Matthews, "Freedom, Unrequested Improvements, and Lord Denning", 40 Cambridge Law Journal (1981),340. 20 (1875) L.R. 10 Ex. 153, 162. 21 See F. Pollock, Principles oj Contract, London, Stevens, 1950, 133; G. Treitel, The Law oj Contract, London, Stevens, 1979 50-52. 22 Cf. Horwood v. Millar's Timber lt917J I K.B. 305, where the metaphor came true. 23 (1860) 9 C.B.N.S. 159, 142 E.R. 62. 24 See also Bainbridge v, Firmstone (1838) 8 Ad. & El. 743, 1I2 E.R. 1019, and Bolton v, Madden (1873) L.R. 9 Q.B. 55. And see O. W. Holmes, The Common Law, Cambridge, Mass., Belknap Press, 1963,229. 25 (1881) 124 N.Y. 538.

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valid. The promisor desired a certain surrender of freedom of action by the promisee, and got it. If he chose to value that surrender at $5,000, that was up to him." To return to the example of A's goods, it must be noted that it is meaningless to talk of A's freedom to deal with them as he pleases in the abstract. That freedom is a freedom vis-a-vis a particular person or persons. A might be free as against everyone, or as against everyone but X, or perhaps free only as against X. When, therefore, we speak of A surrendering his freedom, it is his freedom as against someone or group of persons, and it is to that person or group that A surrenders it. If A is free as against everyone to deal with his goods as he pleases, and then surrenders his freedom as against B (to B), it is only that freedom (i.e. as against B) that is gone. A retains all his freedom as against others, until he chooses to give it up to some (or all) of them, or until legislation takes it away. It is therefore crucial to determine how far and in favour of whom existing duties restrict our freedom of action, to know what we have yet to surrender, and what we no longer retain. Existing Duties

When we consider the possible range of existing duties we usually divide them into two kinds: 1 Those arising under a contract between two or more parties; and 2 Those arising under the general law (e.g. tort). The essential distinction between I and 2 lies in the voluntary assumption of the duty in 1.27 But, for the reasons given above, there is a further factor to take into account, and that is the identity of the person to whom the duty is owed and who may enforce such duty. In contract we can see immediately that this is important, and the doctrine of privity of contract is based upon it. 28 There are those" who consider privity of contract potentially unjust. This writer does not share that view, and the reasons for not sharing it will become apparent later on.

26 See also Dunton v. Dunton (1892) 18 V.L.R. 144and text at note 57. C/. Arrale v. Costain Civil Engineering Ltd. [1976] I Lloyd's Rep. 98, 106 col. 2 where Geoffrey Lane L.J. said "It is no consideration to refrain from a course of action which it was never intended to pursue: see Cook v. Wright . . ." Although prima facie this seems perfectly general, so that the "course of action" could refer to any action, Cook v. Wright (the case relied on for the proposition) was a case of forbearance to sue, and the court's discussion of forbearance was in relation to this alone: "We agreed that unless there was a reasonable claim on the one side, which it was bona fide intended to pursue, there would be no ground for a compromise ..." «1861) I B.& S. 559, 569, 121 E.R. 822,826). 27 On further probing the distinction may be found illusory, but it is used here for expository purposes only. 28 See e.g, Beswick v. Beswick (1968) A.C. 58. 29 E.g. Lord Scarman in Woodar Investment Development Corporation v. George Wimpey & Son Ltd. [1980] 1 All E.R. 571, 591c; Dillon J. in Forsterv. Silvermere Equestrian Centre Ltd. (1981) 42 P.& C.R. 255, 258.

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Existing duties in contract The contract under which the already existing duties arise can be either between the now promisor and now promisee or between the now promisor and a third party. (a) Contract between same parties

The position is clear: since the promisor already owes the duty in question to the promisee he has as against the promisee no freedom to act otherwise, and cannot therefore surrender that freedom to him. The promisor suffers no detriment, and the promisee acquires no new right as a benefit; there is no consideration. In Stilk v. Myrick.t" a captain to whom a seaman was already bound to serve promised the seaman extra wages to bring the ship home shorthanded. The seaman sued for the extra, and failed, because: the desertion of a part of the crew is to be considered an emergency of the voyage as much as their death; and those who remain are bound by the terms of their original contract to exert themselves to the utmost to bring the ship in safety to her destined port. Therefore, without looking to the policy of this agreement, I think it is void for want of consideration ... 31 In the recent case of North Ocean Shipping v. Hyundai Construction" Mocatta J. affirmed this view of the law, though the learned judge was able on the facts of that case to find that further freedoms had been surrendered and fresh rights acquired." (b) Contract with third party

This case is different, however. The pre-existing duty of the promisor is owed to someone other than the promisee. Thus his freedom as against the third party is gone, but not his freedom as against the promisee: the third party may have a right to performance by the promisor, but the promisee as yet has none. If the promisor now surrenders his freedom as against the promisee, so that the promisee can enforce performance himself, the promisee must have obtained a benefit and the promisor must have suffered a detriment, being now liable where he was not before (i.e. as against the promisee, in addition to being liable as against the third party). Those who seek to argue that the acts required of the promisor are no greater are missing the point: the detriment to the promisor in any contract lies not in the acts themselves, but in the fact that the promisor can be compelled to perform them. If A promises B to take £1 from B's pocket, buy a bun with the money, and eat the bun, all in consideration of B's promising to pay A £5, it may in such a case be difficult to see that A is in any factual sense worse off: most would say A was better off. But what is vital is that A no longer retains his freedom of action as against B. Pro tanto B controls him. Thus the

30 (1809) 2 Camp. 317, 170 E.R. 1168. 31 Per Lord Ellenborough at 319-20, 1169; a similar case was Swain v. West Ltd. [1936] 3 All E.R. 261. 32 [1979] Q. B. 805. 33 The case thus resembled Hartley v. Ponsonby (1857) 7 EI. & BI. 872, 119E.R. 1471, rather than Stilk v. Myrick (1809) 2 Camp. 317.

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fact that the acts required of A by B are no different to those already required of A by C is nihil ad rem. What matters is that A has given up even more freedom of action (i.e. his freedom as against B) than he had before." The classic authority for the view espoused here is Scotson v. Pegg:" Here A delivered coal to B, at B's request, in return for B's promise to unload the coal at a specified rate. A sued B for breach of this promise, and B relied on the fact that A was bound under contract with C to deliver to B anyway, and that B's promise was accordingly nudum pactum. A succeeded, however, Wilde B. saying: If a person chooses to promise to pay a sum of money in order to induce another to perform that which he has already contracted with a third party to do, I confess I cannot see why such a promise should not be binding." Ingenious attempts" have been made since to find other, more "real" consideration, but the fact of the matter is that the Court of Exchequer was deciding on the basis that a pre-existing contractual duty owed to a third person could be the subject of a fresh contract with the promisee." This view has been confirmed recently by three decisions of the Privy Council. In New Zealand Shipping v. Satterthwaite" a stevedore was held to supply consideration for the purposes of a unilateral contract with the owner of goods on board ship by performing acts of unloading which the stevedore had already contracted for with the carrier. Lord Wilberforce said: consideration may quite well be provided by the [appellant] as suggested, even though (or it) It was already under an obligation, to discharge to the carrier . . . An agreement to do an act which the promisor is under an obligation to a third party to do, may quite well amount to valid consideration and does so in the present case: the promisee obtains the benefit of a direct obligation which he can enforce. This proposition is illustrated and supported by Scotson v. Pegg, which their Lordships consider to be good law." In Pao On v. Lau Yieu" and even more recently in The New York Star," the Privy Council has again affirmed the correctness of this view, which is absolutely vital for the validity of the "vicarious immunity" arrangements entered into in the modern commercial context.

34 This reasoning also applies, of course, to those who argue that a promise to perform a duty already owed to the promisee can be consideration because it might make the promiseefactually "better off", that is "better off" in the eyes of all "reasonable" people. See e.g. Treitel, supra note 21 at 51; cf. Sutton, supra note 3 at 19-24, and also Hamer v. Sidway, supra note 25. 35 (1861) 6 H.& N. 295. 36 Ibid. at 300. 37 See e.g. Treitel, supra note 21 at 75. 38 See also Shadwell v. Shadwell, supra note 23, and Chichester v. Cobb (1866) 14 L.T. 433. 39 [1975) A.C. 154. 40 Ibid. at 168E. 41 [1980] A.C. 614. 42 1980 3 All E.R. 275.

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Existing duties under the general law It is easy to see how contractual duties are owed to particular persons, and how a distinction can be made for the purposes of consideration. But it must be recognised (as generally it is not) that duties imposed under the general law are also owed to particular persons, and that the identity of these persons is crucial in considering whether performance of or a promise to perform such a preexisting duty can be good consideration. Thus, if A is in possession of Blackacre, B owes a duty not to trespass upon Blackacre to A, not to C, and it is only A, the tort victim, and not C who may sue in respect of the breach of the duty." If we should put the matter in Hohfeldiarr" terms, A has a right that B does not enter Blackacre, and B has the concomitant duty. C is not involved, and has no right that B refrain from entering Blackacre. Were B now to contract with C that in consideration of C's paying B £10 B promises not to enter Blackacre, C would acquire a right which C previously did not have. The general law of property gave B no freedom as against A to enter Blackacre, but said nothing as between Band C. B was, as against C, free to enter Blackacre. By entering into this contract, B has surrendered that freedom (i.e. as against C) to C, and, as mentioned, C now has a right he did not previously possess. The detriment to the promisor is the loss of a small part of his freedom; the benefit to the promisee the acquisition of a right. Since the question is entirely between B and C the question of A's right against B or of B's lack of freedom as against A never comes into it (the same empirical cross-your-bridges notion which produced the doctrine of relative title)." 2

(a) General duty owed to promisee

If then the existing duty imposed on the promisor under the general law is one owed to the promisee, the promisor is attempting to surrender a freedom (i.e. as against the promisee) which he does not then have, and is attempting to confer

43 There are certain statutory inroads and variations on this, such as the Fatal Accidents Act 1976, but the principle is plain. 44 W. N. Hohfeld. Fundamental Legal Conceptions as Applied in Judicial Reasoning, New Haven, Yale University Press, 1923, Ch. I. 45 E.g. Wilson v. Lombank Ltd. [196311 All E.R. 740. This doctrine was abolished by the Torts (Interference with Goods) Act 1977, s.8. See, inter alia, N. E. Palmer, Bailment, Sydney, The Law Book Co., 1979, 163-176.

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upon the promisee the very right the latter already has." Examples of this usually occur in the context of duress to the promisee or his goods, because there has to be some practical reason why the promisee should agree in the first place to accept promise or performance of an existing duty which the promisee could by going to court enforce. But it is important to realise that the role of duress here is not to found an independent cause of action, but merely to demonstrate that the promisee does not pay money (or other performance) as an out and out gift, which he could not then recover, but to secure some act in return from the promisor. If the promisee is unable to show he performed or paid to secure a consideration, but only as a gift, he fails." , Thus, in Astley v. Reynolds," the plaintiff tendered a sufficient sum to the defendant pawnbroker to become entitled to release of the pledge, but the defendant required payment of a greater sum, i.e. payment pro tanto for a right (to possession of the goods) to which the plaintiff was by then entitled. The plaintiff paid to obtain the goods, and then sued to recover the excess payment. The defendent did not dispute that payment made for no consideration could be recovered, but argued that this was made for an unlawful consideration (it being illegal to make this excessive demand) and was therefore to be treated as a gift. The court refused to accept this argument, saying that "we must take it he paid the money relying on his legal remedy to get it back again." More recently, in Universe Tankships v. ITWp9 a similar issue arose. The defendants committed prima facie tortious acts (procuring breaches of contract) to prevent the plaintiff's ship leaving port until sums of money were paid by the plaintiffs, including one the subject of this action, to the defendants for a sailors' welfare fund. The plaintiffs paid up, but once their ship was released sued to recover the payment as money had and received to their use. The argument was that they had paid for no lawful consideration, since the

46 It may be sought to argue that, if the promisee is owed by the promisor the same duty in tort as the latter is now attempting to confer upon the former by contract, and if the damages that would be awarded are more in contract than in tort, the promisee will acquire a greater right than he already had, because instead of his right to £X damages he will now have a right to £ (x + y) damages. Hence there should be good consideration for the contractual promise to do what tort already requires. There are two answers that may be made. The first is to knock down the particular problem, by saying that the measure of damages will in nearly all cases be exactly the same. The only possible difference would be if the remoteness rules produced a different result, and such cases can be dealt with as and when they arise. The other solution is more general, and is to argue that the amount of damages awarded is irrelevant - indeed that whether damages are awarded at all is irrelevant. What matters is that there should be an exactly equivalent normative statement involved, i.e. "You must do this" or "You must notdo that". To argue that the consequences of the rules, as opposed to the rules themselves, were not the same, would be to confuse remedies with rights. We are here concerned with whether A has a right that B do or not do something, and whether that right arises through contract or tort is nothing to the point. That English law may have more than one way of enforcing a right, depending on how it arose, is a matter of interest no doubt, but is here of no importance. Cj. Holmes, supra note 24 at 235-237. 47 Cj. the similar role of mistake in, e.g., Kelly v. Solari (1841) 9 M.&W. 54,152 E. R. 24, where the plaintiff succeeded because payment was to secure some thing in return, and in Wilson v. Thornbury (1875) L.R. 9 Ch. App. 239, where it was gift and the plaintiff failed. 48 [1731) 2 Str. 915, 93 E.R. 939. 49 1982J 2 All E.R. 67.

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freedom of the defendants purportedly surrendered to the plaintiffs for the money payment was a freedom that the defendants in fact did not have. As the defendants were under a duty in tort (the argument ran) not to prevent the ship leaving by procuring breaches of contract, and so on, they had no freedom, as against the plaintiffs, so to do. The House of Lords by a majority held that the Trade Union and Labour Relations Act 1974, s.13(1), did not apply to render the defendants immune in tort." as they had not been acting "in contemplation or furtherance of a trade dispute". Therefore, as against the plaintiffs, the defendants had no freedom, in the circumstances, to do the acts complained of, and promising to surrender that freedom in return for a sum of money was no contract. The defendants were obliged to return the money. It is only fair to say, however, that the main issue disputed on this part of the case was whether or not there was a "trade dispute", and not so much what would be the consequences of holding that there was. (b) General duty owed to other than the promisee

Duties imposed by the criminal law are owed rather to the state or society at large (which brings the action), than to the individual. Thus one might argue that A could surrender his "freedom as against B" to murder B in return for B's promise to pay money." Yet there are two problems. One is that very many criminal offences, including murder, involve the commission of torts, representing duties owed to individuals, for which they may sue. A, therefore, has no "freedom as against B" to kill him which he can surrender to B for a money payment. The other is that, even where a crime involves no tort, public policy may well demand that a contract not to commit the acts, regarded as so wrong that they are made criminal, be not enforced." However, it is possible to find cases where the duty imposed by the law is not owed to the promisee, and where public policy will not intervene. Tort cases may be the most obvious, such as the land trespass case mentioned earlier. A good public law example is Ward v. ByhamP where the father of an illegitimate child promised the mother £1 per week in return for the mother's looking after the child. As the law then was, and still remains, it was the mother's, not the father's, duty to maintain the child. Yet this was not a duty owed specifically to the father, but owed to society at large, represented by the local authority and the Supplementary Benefits Commission." Thus although the mother might have had no freedom as against society to refuse to look after the child, she 5U It may be debated whether s.13(I) has the effect of making an action lawful, or whether it has merely the effect ofremoving a remedy in damages for that action, so that any other remedy (e.g. self-help) is available. Cj. the Law of Property Act 1925, s.40(1), and Monnickendam v. Leanse (1923) 39 T.L.R. 445. 51 Cj. Barton v. Armstrong [1976) A.C. 104. 52 See e.g. Brown v. Brine (1875) I Ex.D. 5, and cj. Hamson, supra note 3 at 240. Such a principle may even extend to serious wrongs not actually criminal offences: Gipps v. Hume (1861) 2 J .&H. 517,70 E.R. 1163. 53 [1956] 2 All E.R. 318. 54 Under the National Assistance Act 1948 and the Supplementary Benefits Act 1966 respectively. (The S.B.C. is now abolished by the Social Security Act 1980, s.6). Whether any duty is owed to the child is less certain: Downing v. Downing (Downing Intervening) [1976] Fam. 288.

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certainly had the freedom to do so as against the father, who had no right to claim compensation if she failed to maintain it. It was the latter freedom (i.e. as against the father) that the mother surrendered, and the father thus acquired an actionable right. Denning L. J. said: I think that there was sufficient consideration to support the promise. I have always thought that a promise to perform an existing duty, or the performance of it, should be regarded as good consideration, because it is a benefit to the person to whom it is given." This of course recalls Lord Wilberforce's words in New Zealand Shipping v. Satterthwaite, that "the promisee obtains the benefit of a direct obligation which he can enforce. "56 Denning L. J. 's view in Ward v. Byham was followed by the Supreme Court of Victoria in Popiw v. Popiw," Here a husband promised his wife (who had left the matrimonial home) a share in the property if she would return to it. She did so, but the husband refused to make the transfer. Hudson J. said: Although it may be true to state that the (wife) was under a duty to cohabit with the (husband) there was no remedy open to the (husband) to compel performance of that duty ... From a practical point of view therefore what the (husband) was to get in exchange for his promise was something which must be regarded as far more advantageous to him than the right of cohabiting with his wife which he had no means of enforcing ... On any view, therefore, I think there was good consideration for the (husband)'s promise." Privity of Obligation What is argued for, then, is that consideration is supplied by surrendering a freedom as against the promisee, and the fact that the promisor may not have the freedom to do the same act as against a third party is irrelevant. What prevents there being consideration is not so much the pre-existence of an obligation as "privity of obligation" with the promisee. This approach owes much to the doctrine of privity of contract, which, it was above submitted, is not quite such an unjust ogre as is sometimes made out. If A assumes an obligation there is no obvious reason why that obligation should be enforceable by absolutely anyone. If enforcement were restricted to those "taking a benefit" under the contract how could the courts determine "benefit", given the highly subjective and stipulative approach the courts have always taken?" Would anyone asserting that he desired the acts to be performed be regarded as taking a benefit by the satisfaction of those desires? If restricted to "promisees" we face a similar definitional problem unless we use the concept of consideration. Given, then, that the promisee pays a "price" for the promise.

55 56 57 58

sq

[1956j 2 All E.R. 318, 319H. 1975 A.C. 154, 168F. 1959 V.R. 197. Ibid. at 199. See also Dunton v. Dunton (1892) 18 V.L.R. 114. See text at notes 18 and 19.

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and that English law cuts down individual freedom no further than absolutely necessary, it would seem odd to say that a promisor had surrendered his freedom as against everyone (or at any rate persons other than the promisee) instead of merely as against the promisee (the only person surrendering freedom in return). 1f it is intended to surrender freedom to a wider class than the promisee, then there are any number of possible alternatives. Within the consideration framework one person may supply consideration on behalf of a number, who are thus joint prornisees.?" The promisee may assign his rights to the third party. Or the promisee may become trustee of the benefit of the contract for the third party. At common law an even more obvious possibility is to make the promise under seal, and there is no necessity even to name the third party." If the promisor and promisee do not arrange the matter in one of these ways, what possible justification is there for depriving the promisor of the chance to cancel his liability by fresh agreement with the promisee alone? Since mechanisms exist whereby a third party can have vested in him a right to an act or acts, either because the promisor so desires (specialty) or because the promisee so desires (assignment, including trust) or because both do so (joint promisees), why destroy a mechanism allowing control to be kept out of the beneficiary's hands, when that is what the parties think desirable? Any "unjust enrichment" of a promisor for the benefit of a third party who fails to perform after receiving consideration from the promisee would be no real problem if the courts were to be a little less cautious in awarding substantial damages to the prornisee.f Not taking any "loss" of the third party "beneficiary" into account in assessing damages is entirely consistent with the surrender of freedom approach adopted above. The third party does not stand to gain anything under the contract, except possibly a "factual" benefit in the same way that, if A contracts to clean B's car, B's car can be said to benefit. In both cases it is the person who stipulated for the actions that has lost out, because his expressed desires have not been satisfied. On a final, allied point, it will be seen that this writer accepts the view put forward by Furmstorr" that there is no difference between the rule that consideration must move from the promisee and the doctrine of privity of contract, and this despite the interesting Privy Council dictum in Kepong Prospecting v. Schmidt'" that although the Malaysian contracts ordinance "enables consideration to move from another person than the promisee ... the appellant was unable to show how this affected the law as to enforcement of contracts by third parties ... " At best, all that this can mean is that in Malaysia the two concepts are different, and are different because the Malaysian ordinance so provides. Nothing is said as to English common law.

60 McEvoy v. Belfast Banking Corporation 119351 A.C. 24, 43; Cou/ls v. Bagot's Executor Co. (1967) 119 C.L.R. 460, 493. 61 Law of Property Act 1925, s.56(1). 62 Beswick v. Beswick 11968] A.C. 58, 89 B-F; Cou/ls v. Bagot's Executor Co. (1967) 119 CiL. R. 460,501-2; Woodar Investment v. George Wimpey & Co. Ltd. 11980] I All E.R. 571, 584h-585c; and see A. Briggs, "Privity Problems in Damages for Breach of Contract", 131 New Law Journal (198\),343. 63 23 Modern Law Review (1960),373,383-4; pace Treitel, supra note 21 at 462-3. 64 [1968\ A.C. 810, 826 B-C.

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Conclusion

The analysis offered, in terms of "privity of obligation", is a suitable basis for justifying the essence of consideration in contract, and indeed of contract itself. It may not be a very "progressive" analysis, but it is submitted that it accords with both popular expectation and the political and philosophical values of the common law.