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TYPES OF CONSIDERATION - Coggle Diagram
TYPES OF CONSIDERATION
Executory Consideration
A promise is made in return for a promise.
Promise for a promise to be executed in future
A
consideration
that consists of a promise is to be executory because the whole transaction remains in the future at times when the promise is made nothing has yet been done to fulfill the promise.
Illustration (a) Section 24:
A agrees to sell his house to B for $10,000. B's promise to pay the sum of $10,000 is the
consideration
for A's promise to sell his house and A's promise to sell the house is the
consideration
for B's promise to pay for it. These are lawful
considerations.
Executed Consideration
is a promise made in return for the performance of an act.
A
consideration
that consists of doing an act.
Example:
A offers $100 to anyone who finds and returns his lost cat. B finds and returns the ct. B's promise is executed and A's liability remains outstanding.
Past Consideration
A promise made subsequent to and in return for an act that has already been performed
It consist of something wholly performed
before
the promise was made
Illustration (c) Section 26:
A finds B's purse and gives it to B. B promises to give A $50.
This is a contract
Under Malaysian law past consideration is sufficient to support a contract in contrast with English law which provides otherwise
Kepong Prospecting Ltd & S.K Jagatheesan v. A.E Schmidt
Schmidt had assisted another in obtaining a permit for mining ore in Johor. He then helped the formation of the company and was appointed managing director. Later, an agreement was entered into between them whereby the company undertook to pay him 1% of the value of all ore sold from the mining land. This was in consideration of the services rendered by Schmidt prior to its formation, after incorporation and for future services. Schmidt continued to render his service to the company.
Held: The services did constitute a valid consideration and Schmidt was entitled to his claim.
Re Mc Ardle (1951)
This 1951 case concerned a house where Mr. McArdle and his wife lived, but which belonged to his mother. McArdle's wife paid for some repairs and improvements in the house, and the mother promised that this would be paid back from her estate when she died.
McArdle and the other beneficiaries of the will produced a document in which they promised to pay this back to Mrs. McArdle upon the death of the mother. When McArdle later inherited the house, the wife claimed that she should be paid, but the beneficiaries of the will refused.
Held :Since the improvements have been carried out before the document was executed, the consideration was past and the promise could not be enforced.