Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd defined consideration as an act

Dunlop pneumatic tyre co ltd v selfridge co ltd

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- Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd defined consideration as ‘an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable’. - Both parties to the contract must provide consideration. S.26 provides that an agreement without consideration is void. It is always for the plaintiff to prove to the Court that he has given the consideration in order to obtain remedy from the defendant. This seems fair as what he has done in order for him to get to the other side of the bargain. - s.4 (c) of the Contracts (Amendment) Act 1976 provides that notwithstanding anything to the contrary contained in the CA 1950 , no scholarship agreement shall be invalidated on the grounds that it lacks consideration. - This was emphasised in the case of University Malaya v Lee Ming Chong (FC) [1986] where it was held that no scholarship agreement shall be invalidated for lack of consideration. In this case, Lee was given a scholarship by UM to further his studies in Canada on condition that he must work for the University for 2 1/2 years. Upon his return, Lee left the University and argued that since there was no consideration as UM had paid the fees. Even if there was no consideration, s.4 (c) provides that a scholarship agreement is not void by absence of consideration. - The rules in regarding consideration: (a) consideration need not be adequate - s. 26 provides that an agreement is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the court in determining whether the consent of the promisor was freely given. For example, where A agrees to sell a horse worth RM 1000/- for RM10/-. A’s consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration. - S. 27 (a) of the Specified Relief Act 1950 provides that if the consideration is so grossly inadequate and there is evidence of fraud or of undue advantage taken by the plaintiff, then the plaintiff will not be allowed to enforce the contract.
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- In Phang See Kim v Beh I Hock (SC) [1964] , the trial judge had held the contract void due to inadequate consideration. On appeal, the Supreme Court held that as long as there was some consideration, the inadequacy was immaterial. The Court said that merely inadequacy of consideration was not sufficient ground to set aside the contract unless the inadequacy was too great that it amounted to duress or fraud. There should be evidence of duress or fraud to make the contract void. (b) unilateral declaration insufficient to make contract - Where no consideration is given by the promisee, the promisor merely owes a moral obligation to perform the contract as per the case of Guthrie Waugh Bhd v Malaippan Muthucumaru [1972] .
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  • Winter '17
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