# Explain types of consideration with a case study
## Introduction
In the law of contract in England and Wales, consideration is a fundamental element required for an agreement to be legally enforceable, unless it is made as a deed. It is often described as the ‘price of the promise’, meaning that each party must provide something of value to the other. Consideration can take different forms, and understanding these distinctions is key to determining whether a valid contract has been formed. This essay will explain the main types of consideration: executory and executed, and will contrast these with past consideration, which is generally not valid. The principles will be illustrated through a case study of the classic case, *Carlill v Carbolic Smoke Ball Co* [1893] 1 QB 256.
## Types of Consideration
Consideration can be categorised based on the timing of the performance in relation to the promise. The two main valid types are executory and executed consideration.
**Executory consideration** is where the parties exchange promises to perform acts in the future. This is typical in bilateral contracts, where both parties have outstanding obligations. For example, if A promises to sell their car to B for £5,000, and B promises to pay the £5,000 upon receiving the car, the consideration is executory on both sides. Neither party has yet performed their part of the bargain, but the exchange of promises is sufficient to form a binding contract (Poole, 2021).
**Executed consideration** is where one party’s promise is made in exchange for an act performed by the other party. The consideration is ‘executed’ once the act is completed. This is characteristic of unilateral contracts, where only one party makes a promise, and the other party accepts by performing the required act. For instance, if someone offers a reward for a lost dog, the consideration from the finder is the act of finding and returning the dog.
In contrast to these, **past consideration** is not recognised as valid consideration. This occurs when an act is performed before a promise of payment or reward is made. Because the act was not done in return for the promise, it cannot be the ‘price’ of it. The case of *Re McArdle* [1951] Ch 669 illustrates this principle. Improvements were made to a house, and after the work was completed, the owners promised to pay for it. The court held this promise was unenforceable because the work was past consideration.
## Case Study: Carlill v Carbolic Smoke Ball Co
The case of *Carlill v Carbolic Smoke Ball Co* [1893] 1 QB 256 provides an excellent illustration of executed consideration in the context of a unilateral contract.
The Carbolic Smoke Ball Company placed an advertisement in a newspaper, promising a £100 reward to any person who contracted influenza after using their ‘smoke ball’ product three times daily for two weeks, according to the printed directions. To show their sincerity, the company stated that they had deposited £1,000 with a bank. Mrs Carlill purchased and used the smoke ball as directed but subsequently caught influenza. When she claimed the £100 reward, the company refused to pay, arguing, among other things, that there was no consideration from Mrs Carlill for their promise.
The Court of Appeal rejected the company’s arguments and found that a binding contract existed. The court held that the advertisement constituted a unilateral offer to the whole world, which Mrs Carlill had accepted by her performance. The key issue for this discussion is how the court dealt with consideration. It was held that Mrs Carlill had provided valid, executed consideration. Bowen LJ explained that consideration consists of either some benefit to the promisor or some detriment or inconvenience suffered by the promisee. In this case, Mrs Carlill’s consideration was the act of purchasing and using the smoke ball as directed. This constituted an inconvenience to her and, at the same time, the use of the product by consumers provided a benefit to the company through increased sales and public confidence in their product. Her performance of the conditions in the advertisement was the price she paid for the company’s promise, and therefore it was valid executed consideration.
## Conclusion
In summary, the validity of a contract often depends on the presence of consideration, which can be executory (an exchange of promises) or executed (a promise in exchange for an act). The case of *Carlill v Carbolic Smoke Ball Co* demonstrates the practical application of these rules, confirming that performing the stipulated conditions of a unilateral offer is sufficient to be classed as executed consideration. The decision makes it clear that where a person suffers a detriment or inconvenience at the request of another, this can form the ‘price’ of the other’s promise, creating an enforceable agreement. This distinguishes it from past consideration, which, as seen in *Re McArdle*, is not sufficient to enforce a subsequent promise because the act was not performed in exchange for it.
## References
- Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
- Poole, J. (2021) Textbook on Contract Law. 15th edn. Oxford University Press.
- Re McArdle [1951] Ch 669.
