In English law if other than the promisee provide consideration, then the promise could not be enforce by the law. This problem usually may arise when third party involve. For example in the case of Price v Easton (1833), In this case X are doing work for Easton and Easton make a contract with X. In return for X services Easton would pay a price of $19 to Price. The work was done by X but Easton didn’t make any payment to Price and Price sue Easton. Court held that Price claim failed as he didn’t make any consideration.
However under the Malaysia law third party of promise are allowed to provide consideration. Section 2(d) of contract Act 1950 define consideration as “when at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something such act or abstinence or promise is called a consideration for the promise”. For example in the case of Kerpa Singh v Bariam Singh , The defendant own RM8,869. 94.
In order to settle the debt the defendant son offer a cheque to plaintiff RM4,000 in full settlement for his father debt. The plaintiffs cash the cheque and demand for the balance of the debt. The federal court ruled that as the plaintiff cash the cheque. It is consider that the plaintiff has acceptance the defendant son offer in full satisfaction preclude the plaintiff to claim the balance of the debt. This means that, for an agreement to be binding the both party, consideration must be take place before the construction of the agreement.
In the case of Guthrie Waugh Bhd v Malaippan Muthucumaru the court held that as far as the defendant was concerned, the deed was executed by him neither for any past consideration, nor in respect of forbearance to sue him for the supplies made to the estates, nor in consideration of any promise to supply him goods on credit in future. Therefore, there was no cause of action as the claim based on deed agreement for which there was no consideration and the defendant could be said to have undertaken was a moral obligation.
This means that if there is no consideration they would be no contract between the party. Consideration can be classified as executory, executed and past. In the case of Wong Hon Leong David v Noorazman Bin Adnan the defendant promise to pay RM268,888 to the plaintiff for his service if he obtaining approval of application. The couth held that under the section 2(e) contract act 1950 stated that “every promise and every set of promises, forming the consideration for each other is an agreement”.
Therefore in this case as there is a promise made by the defendant although it is executory consideration, it is a good consideration. For that reason there is a contract binding both party. Executed consideration defines as when a party act or has been performance something given or accepted must be return for the promise. Executed consideration can be seen in the case of Carlil v Carbolic Smoke Ball Co Limited, In this case the advertisement which has been made by Carbolic Smoke Ball remain offer until Mrs carlil bought the Smokeball it remain executory.
By using the Smokeball was the consideration and it will remain executory until the performance is completed and become executed. Used it and caught influenza the contract would binding the both party. It would become an executed consideration when clear promise are been made by both party, usually this can been seen in a bilateral contract. For the executory contract, there would be only one party that are binding to which promise they have made, as the other party would not be binding to do any performance or promise (until the act is performed) such contract are known as unilateral contract.
In Malaysia law, passed consideration is recognized as a good consideration. This is different than English law as it’s general rule doesn’t recognize past consideration. Although that is the case there are some cases such as Lampleigh v Brathwait where it’s exeption by this rule, in this case Bratwait promise to give Lampleigh $100, if he help him to get pardon as he has killed someone. As Lampleigh has performance Bratwait didn’t keep his promise.
The court held that the service would be paid and was not past as it appear to be unspoken understanding. In Malaysia the good examples of case for past consideration are Kepong prospecting v Schmidt, Schmidt a consulting engineering assisted Tan to obtain iron ore permit. Tan promise to Schmidt a tribute of 1% for every iron produced and soled. In the year 1954, after the company formed, Schmidt was not party of the agreement not until in the year 1955. Schmidt claimed payment of 1% which has been promise from the company for both year 1954 and 1955.
The court held that, Schmidt can only claim the agreement that made in 1955 and not 1954 due to one fact that he was not a party of that agreement until 1955. In conclusion of this assignment, as consideration in one of the 5 elements in acceptance a contract. It play very importance role in formation of a contract as there no “meeting of mind” between the two party to be bound in a contract means there have been no agreement taken place and the contract are void.
In any cases the court would first look if there is any consideration have been taken place before the formation of the contract. There are many cases which recognize the importance of consideration but in Malaysia law we can see that there slightly different with the English law. For example in English law they do not recognize past consideration as a good consideration, although in few cases there are exception. In Malaysia in other hand recognize past consideration as good consideration.