Past Consideration in Contract Law
Past Consideration
What is Consideration?
Quick recap:
Consideration is something of value given or promised in return for a contract — a necessary element for a valid contract.
What is Past Consideration?
Past consideration means something that was done or given before the promise was made.
It is an act or benefit already performed or given prior to the current promise.
In contract law, past consideration is generally not valid consideration.
Why is Past Consideration Not Valid?
Because the act was done without the expectation of the current promise.
The promise is made after the fact, so it is not given in exchange for the past act.
Contract requires a bargain or exchange: present or future consideration.
Illustration:
A helps B fix his car.
Later, B promises to pay A ₹5,000 for the help.
Since the help (consideration) was given before B’s promise, this is past consideration.
B’s promise is generally not enforceable as a contract because A’s act was not done in exchange for it.
Exception to the Rule:
Past consideration may be valid when:
The past act was done at the promisor’s request.
The parties understood the act would be compensated.
The promise to pay later is reasonable and binding.
Key Case Laws:
1. Re McArdle (1951)
Facts: A family carried out repairs on a house. Later, they were promised money for the work already done.
Held: The promise was not enforceable because the work was done before the promise—past consideration.
2. Roscorla v. Thomas (1842)
Facts: Buyer bought a horse. After the sale, seller promised the horse was free from defects.
Held: The promise was not binding since it was made after the sale; the consideration (purchase) was in the past.
3. Pao On v. Lau Yiu Long (1980)
Privy Council recognized exceptions:
Past consideration can be valid if done at promisor’s request with an understanding of payment.
Summary Table
| Aspect | Explanation |
|---|---|
| Past Consideration | Act done before promise; generally not valid |
| Reason | No exchange or bargain at the time |
| Exception | Act done at promisor’s request & understood as payable |
| Key Case | Re McArdle, Roscorla v. Thomas, Pao On v. Lau |
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