LAW5002 · Principles of Contract Law A
Consideration
Consideration is the third element of contract formation studied in Monash University's LAW5002 Principles of Contract Law A: outside a signed deed, a promise is enforceable only if it is bought — supported by consideration, "the price for which the promise is bought." This chapter unpacks the bargain and value limbs, the rule that consideration must be sufficient but need not be adequate, the existing-duty rule and practical benefit, part-payment of a debt, and past consideration. It is grounded in the leading Australian and English authorities and framed for the problem-question, IRAC style the final exam rewards.
What this chapter covers
- 01Why a non-deed promise needs consideration — the bargain (quid pro quo) and value limbs
- 02Consideration must move from the promisee, though it need not move to the promisor
- 03Sufficient but not adequate: courts do not police the fairness of the exchange
- 04The existing-duty rule (Stilk v Myrick) and doing more than the duty (Hartley v Ponsonby)
- 05Practical benefit as consideration, absent duress (Williams v Roffey; Musumeci v Winadell)
- 06Part-payment of a debt: Pinnel's Case and Foakes v Beer, and the 'extra' that saves it
- 07Compromise of a genuinely disputed claim (Wigan v Edwards) and the estoppel fallback
- 08Past consideration (Roscorla v Thomas) and the Lampleigh / Pao On request exception
Existing duty vs practical benefit — 'Advise Delgado'
- +2Issue: is the cafe's promise to pay the extra $3,000 supported by consideration, given Delgado was already contractually bound to re-tile the kitchen for $18,000?
- +3Rule: performing an existing duty owed to the same promisor is not fresh consideration (Stilk v Myrick); but a practical benefit to the promisor, absent duress, can be (Williams v Roffey Bros; Musumeci v Winadell). Consideration must be sufficient but need not be adequate (Woolworths v Kelly).
- +5Application: on Stilk, finishing the same job is not new consideration, so the promise looks unenforceable. But the cafe gained a real practical benefit — on-time completion, passing the inspection, and avoiding the cost of finding a replacement tiler mid-job (Williams v Roffey / Musumeci); the court will not ask whether $3,000 was 'adequate' (Woolworths v Kelly). Counter-argument: if Delgado made an illegitimate threat to walk off, economic duress defeats the practical-benefit route.
- +2Conclusion: absent duress, the promise is supported by a practical benefit and Delgado can most likely recover the extra $3,000 (total $21,000); if duress were established the promise would be voidable and Delgado limited to the original $18,000.
Key terms
- Consideration
- The price for which a promise is bought; outside a deed, a promise is enforceable only if supported by consideration — a bargained-for act or promise of value moving from the promisee.
- Bargain (quid pro quo)
- The requirement that the act or counter-promise be given in return for the promise, not merely as a condition attached to a gift (Australian Woollen Mills v Commonwealth).
- Sufficient but not adequate
- Consideration must have some real value in the eyes of the law (sufficient) but need not match the worth of the promise (adequate); courts do not police the fairness of the exchange (Woolworths v Kelly; Chappell & Co v Nestle).
- Existing-duty rule
- Performing, or promising to perform, a duty already owed to the same promisor is generally not fresh consideration for a new promise (Stilk v Myrick).
- Practical benefit
- A benefit obtained (or disbenefit avoided) by the promisor that, absent duress, can be consideration for a promise to pay more (Williams v Roffey Bros; Musumeci v Winadell).
- Part-payment of a debt
- Payment of a smaller sum cannot by itself satisfy a larger debt; a creditor who accepts part-payment 'in full settlement' gets no consideration for forgoing the balance (Pinnel's Case; Foakes v Beer).
- Past consideration
- An act wholly completed before the promise is made is not good consideration (Roscorla v Thomas), unless the request exception applies (Lampleigh v Brathwait; Pao On v Lau Yiu Long).
- Request exception
- A past act supports a later promise if it was done at the promisor's request, both parties understood it would be paid for, and payment promised in advance would have been enforceable (Pao On v Lau Yiu Long).
Consideration FAQ
Is a promise to pay more for the same work ever binding?
Yes, in limited circumstances. The default is that performing an existing contractual duty owed to the same person is not fresh consideration (Stilk v Myrick), so a bare promise to pay extra for the same job is unenforceable. But if the promisor obtains a genuine practical benefit — such as secured on-time completion or avoiding the cost of a replacement — and the promise was not obtained by economic duress, that practical benefit can be consideration (Williams v Roffey Bros; adopted in Australia in Musumeci v Winadell). Always check for duress, and keep this 'pay more' scenario separate from 'accept less' debt cases governed by Foakes v Beer.
Why isn't accepting part-payment of a debt binding on the creditor?
Because the debtor was already bound to pay the whole sum, so paying part of it gives the creditor no fresh consideration for releasing the balance (Pinnel's Case; Foakes v Beer). A creditor who accepts, say, $8,000 'in full settlement' of a $12,000 debt can generally still sue for the remaining $4,000 — unless the debtor gave something extra (early payment, a different form, a chattel, or a deed), the claim was genuinely disputed (Wigan v Edwards), or the creditor is stopped by promissory estoppel after the debtor relied on the promise to their detriment.
Can AI help me with consideration in LAW5002?
Yes, for understanding — not for outsourcing. An AI tutor like Sia can explain consideration step by step: it can drill the difference between Stilk v Myrick and Williams v Roffey, walk you through the three-part Pao On request test for past consideration, and check whether your practice answer follows IRAC and names the source of each rule. What it will not do is sit your exam, write your assignment, or guarantee a grade — and note that generative AI is not permitted in the LAW5002 final exam itself. Use it to learn the doctrine, then practise applying it in your own words.
Studying with AI? Sia — free AI law tutor works through LAW5002 step by step.
Exam move
Build one decision flow you can run on any 'is this promise enforceable?' fact pattern: deed gate, then the bargain and value limbs, then the sufficiency filter, then the specific traps — existing duty and practical benefit (Stilk / Williams v Roffey, checking duress), part-payment (Foakes v Beer, hunting for the 'extra' or a genuine dispute, flagging estoppel), and timing (past consideration and the Pao On request exception). Practise with short IRAC answers using your own facts, always naming the leading case as the source and arguing both sides, because that is exactly what the final-exam marking criteria reward.
