Consideration in construction contracts may appear at first an unlikely topic to require detailed discussion. After all, such contracts, whether they are made between commercial companies or between a householder and a builder, usually involve the outlay of significant sums of money. This would suggest that consideration and the intention to create legal relations are always likely to be present. This perception is not entirely accurate, however. The doctrine of consideration is of major importance in construction contracts. This is the inevitable consequence of a number of factors likely to be present, such as the length of the contractual chain stretching beyond the parties to their subcontractors and suppliers. In addition, the system of competitive bidding means that one party may well underprice the cost of the work, or the price of the work escalates beyond its control, thus raising the possibility that one party may wish to renegotiate the agreement. Such contracts are often made for the benefit of third parties, and thus it is inevitable that the rights of third parties will be involved at some stage. Lord Dunedin approved, in Dunlop Pneumatic Tyre Co Ltd v. Selfridges and Co Ltd  AC 847, the definition provided by Pollock (1936, p. 133). Consideration is ‘an act of forbearance of the 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’. Chitty considers that the doctrine is there to provide legal limits on the enforceability of agreements, even when they are meant to be legally binding. Such a valid agreement can only be vitiated by mistake, misrepresentation, duress or illegality (Beale, 1999, p. 167).
Swipe to navigate through the chapters of this book
Please log in to get access to this content
To get access to this content you need the following product:
- Macmillan Education UK
- Sequence number
- Chapter number