Executed consideration

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Executed consideration
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Executed consideration is a performed, or executed, act in return for a promise. Therefore, in reward cases, for example, a promise to pay a reward when an act is done becomes enforceable only when that act is performed[1].

Executed consideration, that is, where one party has received a benefit for which he must pay, it is plain that implied contracts are wholly aside from the purpose and intent, as well as without the language of the enactment[2].

If, for example, A offers a reward for the return of lost property, his promise becomes biding when B performs the act of returning A's property to him. The claimant's act in Carlill's case in response to the smoke ball company's promise of reward was thus executed consideration[3].

Fig.1. Valid consideration rules

Types of consideration

Consideration can be divided into the following three categories[4][5]:

Example: Omar promises to do some work in return for a promise of payment; shopkeeper's promise to supply the goods and customer's promise to accept the goods and pay. In the above examples, neither party has yet done any act but each party has given a promise in order to obtain the promise of the other person. It would be a breach of contract if either party withdraw from his/her promise without the consent of the other

  • Executed consideration this is an act in return for a promise.

Example:Richard loses his wallet and offers Bogdan a reward if he finds and returns the lost wallet. It is only when Bogdan finds the wallet and duly returns it to Richard that the reward becomes enforceable and the consideration becomes valid.

  • Past consideration such consideration, actually is not regarded as a valid consideration. Usually, consideration is provided either at the time of the creation of a contract or at a later date.

Example:Robert mows Mike's lawn and a week later Mike gives a cheque for $10. Robert's work is valid consideration in exchange for the cheque.

Additional rules for valid consideration

As well as being either executed or executory, there are additional rules that must be met for consideration to be valid[6]:

  • Performance must be legal, the courts will not enforce payment for illegal acts
  • Performance must be possible, agreeing to perform the impossible is not a basis for a biding contract
  • Consideration must pass from the promisee
  • Consideration must be sufficient but necessarily adequate


  1. ACCA Paper F4- Corp and Business Law 2012, p.79
  2. T. A. Street 2000, p.173
  3. Business Essentials: Business Law 2010, p.80
  4. ACCA: For Exams 2007, p.32-33
  5. L. Roach 2016, p.143-144
  6. Business Essentials: Business Law 2010, p.81


Author: Sylwia Jurkowska