LAWS6991 Chap.4 Consideration and the Practical Benefit Exception
Consideration and the Practical Benefit Exception
Consideration is the price paid for a promise. The promisee must confer a benefit or incur a detriment, given as the price of the promise. It has to be sufficient, though not adequate, as Chappell v Nestle shows, and past consideration does not count, as in Roscorla v Thomas. Part payment of a debt does not discharge the whole under Pinnel's Case and Foakes v Beer.
Performing an existing duty is traditionally no consideration, but Williams v Roffey and Musumeci v Winadell recognise a practical benefit exception.
What this chapter covers
- 01
Benefit and detriment
- 02
The bargain requirement
- 03
Sufficiency and adequacy
- 04
Past consideration
- 05
Part payment of a debt
- 06
Existing contractual duty
- 07
Practical benefit in Williams v Roffey
- 08
Musumeci v Winadell reformulation
Worked example · free
A rent concession during a slow season
- 1Shortfall: $4,000 minus $3,000 is $1,000 a month, and over four months that is $4,000.
- 1Issue: did the tenant give consideration for the landlord's promise to accept less, given that she only kept paying rent she already owed?
- 1On the traditional existing duty rule and Pinnel's Case, paying less than is owed gives no consideration for a release of the balance.
- 1Musumeci v Winadell applied the practical benefit exception to a rent reduction: the landlord avoided a less than fully let centre, which was worth more in practice than its remedy against the tenant.
- 1Absent duress or unfair pressure by the tenant, the landlord's promise is likely binding, so the $4,000 shortfall is probably not recoverable.
Key terms
- Quid pro quo
- The idea that consideration must be given as the agreed price for the promise, not merely as a condition of a gift.
- Past consideration
- An act completed before the promise was made, which cannot support that later promise.
- Nudum pactum
- A naked agreement unsupported by consideration on both sides, which the law will not enforce.
- Practical benefit
- An advantage in fact, such as timely completion or avoiding loss, that can be consideration for a promise to pay more.
- Existing duty rule
- The rule that promising to do what one is already contractually bound to do is not good consideration.
- Sufficiency
- The requirement that consideration be something the law recognises as having value, whatever its adequacy.
Consideration and the Practical Benefit Exception FAQ
Does consideration have to be worth as much as the promise?
No. It has to be sufficient, in the sense of recognised by law, though it need not be adequate. In Chappell v Nestle even chocolate wrappers the company threw away were part of the consideration, because the company asked for them.
Why was buying wool not consideration in Australian Woollen Mills?
Buying wool was a condition for qualifying under a government subsidy policy, not the price the Commonwealth requested in exchange for a promise. The High Court held that there was neither a contract nor consideration, nor any intention to be legally bound.
Can a creditor who accepts less later sue for the rest?
Under Pinnel's Case and Foakes v Beer, yes, unless the debtor gave something new or the release was made by deed. Paying a smaller sum on the due date gives the creditor nothing extra.
What is the test in Williams v Roffey?
Where B doubts that A will complete, promises extra for A to perform as already bound, and obtains a practical benefit, the promise binds unless obtained by duress or fraud. The court called this a pragmatic approach to consideration.
How did Musumeci v Winadell change the test?
Santow J restated the elements so that either a practical benefit to B or a detriment to A can be consideration, and listed economic duress, fraud, undue influence, unconscionable conduct and unfair pressure as disqualifying factors.
Is a promise made after the work is done enforceable?
Usually not. Roscorla v Thomas treats an earlier act or sale as past consideration because it was not given in exchange for the later promise, so the promise lacks consideration.
Exam move
Learn consideration as a set of questions in a fixed order: was anything given, was it given as the price of the promise, was it sufficient, was it given before the promise, and was it only an existing duty? Keep one case for each question. For the practical benefit exception, memorise the Musumeci elements as a checklist and practise naming the benefit in concrete terms.
Problems often hide consideration inside a variation of an existing contract, so watch for promises of extra pay mid-performance. Ask Sia to vary the facts of a Roffey style problem and check whether your answer changes.
Working through Consideration and the Practical Benefit Exception in LAWS6991? Sia is AskSia’s AI Law tutor — ask any LAWS6991 Consideration and the Practical Benefit Exception question and get a clear, step-by-step explanation grounded in how LAWS6991 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.
