The sufficiency of consideration

pharmacy

With a view to increasing the participation of students in the publication, the National Health Magazine creates a new column for letters and contributions from university students. As an incentive, writers of any article published will receive the sum of N20,000.

Oliver, a pharmacy student in Benin, has a school assignment which is required to be published in a health journal. He sends his write-up to the National Health Magazine. Fortunately, his contribution is selected and published along with articles of some other students. Oliver proceeds to the offices of the magazine to receive his remuneration. On meeting with the editor, he is informed that the magazine has accepted more entries than was budgeted for. He is offered N10,000, instead, as compensation. Oliver accepts the sum of money and signs with the accounts department for the collection.

After one week, the money from the magazine is exhausted. Oliver wants more. He writes a letter to the editor of the National Health Magazine, demanding for the payment of N10,000, being the balance of his remuneration. The editor replies him stating that: (1) Oliver’s write-up was of no real value to the magazine in the first place; (2) He already had a duty to publish his school assignment and so his contribution was merely in fulfillment of that duty; and (3) He accepted the sum of N10,000 offered and was paid in good faith.

In view of this, what are the legal rights of Oliver and the liabilities of the National Health Magazine?

It has been established that a contract between two parties requires an exchange. This may involve money, a product, a service or a promise to perform a certain action. The term ‘consideration’ refers to that which is exchanged. For a party to be able to enforce a contract, he or she must have furnished some consideration in support of it. This consideration must have some value in the eye of the law.

The legal issues to be considered in this case are:

1. The determination of something of value.
2. The performance of an existing duty.
3. The variation of a contract.
4. Composition with creditors.

The sufficiency of consideration means that what is provided by a party in a contract must be ascertainable, useful or meaningful; otherwise it will be regarded as insufficient. Judicial declarations support the notion that consideration does not have to be something of economic benefit. In the view of the legal scholar, J. C. Smith, “all that is necessary is that the defendant should, expressly or impliedly, ask for something in return for his promise, an act or promise by the offeree. If he gets what he asks for, then the promise is given for a consideration.”

With regard to Oliver’s contribution to the magazine, it is the view of the editor that his write-up added no value to the publication. However, in the case of De la Bere v. Pearson, the question arose whether a letter from a reader was sufficient consideration to a newspaper. It was held that there was consideration, as such publications had a tendency to increase the circulation of the newspaper. Considering that the National Health Magazine created the coloumn to reach more students, it is apparent that the involvement of a student, like Oliver, constituted something of value.

Subsequently, there is the question of the performance of a duty that one is already bound to fulfil. From the case of Collins v. Godefroy, it is established that a party cannot enforce a promise made to him in return for his performance of a public duty. On the other hand, Oliver’s commitment was to a school assignment, which he was not bound by law to fulfil. Rather, this was a duty to a third party (his lecturer).   In the New Zealand Shipping Case, it was declared that “an agreement to do an act which the promisor is under an existing obligation to a third party to do, may well amount to valid consideration.”

A major point of contention is the variation of the magazine contract to pay a student writer N10,000 in lieu of the advertised sum of N20,000. It is the position of the editor that since Oliver accepted the arrangement, the magazine is no longer liable to pay the balance. On the contrary, the authourity for this is Pinnel’s Case, where a creditor accepted to be paid a lower sum and later sued for the outstanding amount. The court held that the payment of a lesser sum could not discharge a debtor from the obligation to pay the full amount of debt.

The basis of this judgement is clear. For this new arrangement to be tenable, there must be some new form of consideration from the debtor. The magazine should have given something in compensation for the difference, otherwise the promise by the creditor to accept less money would not be enforceable.

Finally, in the settlement of debts, there is a concept known as composition with creditors. This is a situation where one debtor has multiple creditors and an arrangement is jointly made with all the parties to accept a lower sum in order to offset the debts simultaneously. In Wood v. Roberts, it was held that such an agreement is binding on all of them and none can subsequently sue for the balance of his debt. If the magazine had made a joint agreement with all the student writers, the arrangement would have been binding.

In conclusion, Oliver is entitled to the outstanding sum of N10,000. The National Health Magazine is liable for the full sum advertised.

Principles and cases are drawn from Sagay: Nigerian Law of Contract