Audio recording 7.1 transcript
So, chapter seven concerns the important topic of consideration, which I mentioned as regards to chapter one, that you might think of consideration as the price tag on the promise, and something which is important to show that the contract is a bargain. So, you've got to give something in return for the other party's promise, in order for it to be enforceable as a contract. And importantly, the court won't assess the adequacy of the consideration. So, you need to give something in return for the other party’s promise. But as long as what you give isn't contrary to public policy, and it doesn't particularly matter what it is, so if I sell you my pen for a thousand pounds, then that's okay for a binding contract. There's sufficient consideration to support the promise, even though the pen isn't really adequate consideration in return for one hundred pounds, the court won't assess the adequacy of the consideration. And importantly, the court won't rescue you from a bad bargain. So even though it looks like a very bad deal, the court won't rescue you from a bad bargain, by assessing the adequacy of the consideration. Now it's very clear as a matter of positive law that you do need consideration, in order to form a contract. It's one of the elements that helps to demarcate contractual promises from other promises. It's sometimes said that perhaps all you really need is to show that there's an intention to be bound that the parties objectively share. And we'll look at—it tends to create legal relations in chapter eight. But there would then be a difficulty that if we did consider it as a requirement, how would we deal with gifts? So, consideration is useful in demarcating contractual policies, from gift promises and other sorts of promises. And I think it is clear that we do need consideration for contract formation. What's much harder, I think, is whether we still need consideration, or should need consideration, to vary a contract that has already been validly formed. And that's what we'll look at in the next video in this chapter.