Misa v Currie
House of Lords
Citations: (1876) 1 App Cas 554.
Lizardi sold Misa four bills of exchange drawn from Currie (a banker). Misa agreed to pay three days later. Three days later, Misa paid by cheque. By then, Lizardi had fallen into debt with Currie. Lizardi gave Currie security on Misa’s payment. However, Misa learned that Lizardi was having money troubles and instructed his bankers not to honour the cheque. Lizardi absconded, so Currie sued Misa for payment. Misa argued that neither themselves nor Lizardi had provided consideration for the cheque, so there was no contract.
- Had the parties provided consideration for their agreement?
The House of Lords held in favour of Currie. Lizardi had given consideration by providing the bills of exchange. That they later turned out to be worthless because Lizardi became bankrupt was irrelevant, because at the time the bills were drawn Lizardi was in credit. Meanwhile, Misa had given consideration by promising to pay for the bills.
This Case is Authority For…
The first instance judge provided the archetypal definition of consideration:
A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility, given, suffered, or undertaken by the other.
The existence of consideration is assessed at the time of contracting. The fact that the agreement later fails or the consideration later turns out to be worthless is not relevant.