Scotson v Pegg
Court of Exchequer
Citations: (1861) 6 Hurlstone and Norman 295; 158 ER 121.
The claimant offered to deliver coal to the defendant if they discharged that coal at a rate of 49 tons a day. The defendant agreed. The claimant had already made the exact same contract with a third party. The defendant later argued that there was no contract. The promise, they argued, was not good consideration. This was because the claimant was already bound to deliver the coal.
- Was the promise to deliver coal good consideration?
The Court held in favour of the claimant. The promise was good consideration notwithstanding that the claimant was already bound to perform under a third-party contract.
This Case is Authority For…
A promise to perform an act that a person is already bound to perform under a contract with a third-party is good consideration.
Wilde B explained the reason that an obligation to a third-party can be good consideration. He stated that is it possible for multiple people to have an interest in performance. Another way of putting it is that even though the claimant was obliged to perform, the defendant still got something new and valuable from the agreement:
Before the agreement, the defendant had no legal right to enforce the promise. If the third-party chose not to enforce their contract, the defendant would lose his interest in having the claimant perform. After the promise, the defendant had the power to sue the claimant for breach in his own right. This is valuable and therefore consideration.