Consideration

Once the offer has been accepted there is now an agreement. In English law this will not be binding even if in writing and signed (unless under seal) without a ‘consideration’, which is essentially ‘the price’ given in return for the promise, i.e. the agreement must be a ‘bargain’. The offeree must not only accept the offer but must in return for that offer give some element which makes the agreement into the bargain; this element has become customarily called consideration for historical reasons.   The consideration has to move from the offeree (the one accepting the offer) to the offeror (the one who made the offer). It is said that ‘consideration must be of value, but need not be adequate’. This means that what is given in return for the offer must be legally recognisable; it has to be more tangible than a moral obligation. However, the consideration does not have to be of the same commercial worth as the offer for which it was given. £100 could still be valuable consideration in return for the offer to sell a Rolls Royce. Valuable consideration does not even have to be money, one need only refer to the expression “a peppercorn rent” which dates back to the days when accommodation was granted by aristocrats or royalty to favoured persons and in order to create a binding contract the tenant undertook to pay one peppercorn each year.  Peppercorn rents exist even today although the actual handing over of the ‘rent’ never actually happens.