FLK1 · Contract

Consideration & intention to create legal relations

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

CON.02 — Consideration & Intention to Create Legal Relations

A simple (non-deed) contract needs agreement + consideration + intention to create legal relations. This note covers the last two.

Consideration — the core rules

Consideration is the "price" of the promise: a benefit to the promisor or a detriment to the promisee (Currie v Misa). A bare promise is not binding unless made by deed.

Key principles:

Must be sufficient but need not be adequate — the law won't police a bad bargain. Nominal/token consideration counts (Chappell v Nestlé — chocolate wrappers were part of the consideration).
Must move from the promisee — but need not move to the promisor.
Past consideration is no consideration — something already done before the promise is unenforceable (Re McArdle; Roscorla v Thomas). Exception: the act was done at the promisor's request, both understood it would be paid for, and payment would have been legally enforceable if promised in advance (Lampleigh v Braithwait; Pao On v Lau Yiu Long).

Existing duties (high-yield)

Existing public duty — doing only what the law already requires is not consideration; exceeding it is (Collins v Godefroy; Glasbrook v Glamorgan).
Existing contractual duty owed to the same party — traditionally no consideration (Stilk v Myrick). BUT performing an existing duty can be good consideration where the promisor gains a practical benefit and there is no duress (Williams v Roffey).
Part payment of a debt — paying less does not discharge the whole (Pinnel's Case; Foakes v Beer). Equity may estop the creditor from going back on a promise to accept less: promissory estoppel (Central London Property v High Trees). It is a shield, not a sword (Combe v Combe), generally suspends rather than extinguishes rights, and requires reliance + that it be inequitable to renege.
Existing duty owed to a third party is good consideration (Scotson v Pegg).

Intention to create legal relations

Two rebuttable presumptions:

Domestic/social agreements — presumed NO intention (Balfour v Balfour; rebutted where spouses are separating — Merritt v Merritt).
Commercial agreements — presumed intention to be bound (Esso v Commissioners). Rebut only by clear words, e.g. "binding in honour only" (Rose & Frank v Crompton) or "subject to contract".

Traps

Don't confuse adequacy with sufficiency.
Consideration ≠ motive.
Promissory estoppel cannot found a cause of action; you still need consideration to create a contract.

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In January, a doctor negotiating the sale of his medical practice tells the buyer, truthfully, that the practice generates around £2,000 a month in income. Contracts are not signed until May. Between January and May the doctor falls seriously ill, stops practising, and the patient list collapses, so that by the time of signing the practice earns almost nothing. The doctor says nothing about this change. The buyer, still relying on the January figure, completes the purchase and then discovers the true position.

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