http://www.affordablehousinginstitute.org/blogs/us/hanging_judge_small.jpgI’ve heard it attributed – perhaps apocryphally – to John Maynard Keynes the line that a legal training is a form of brain damage.  I couldn’t find it on google when I last looked, so I don’t know if he said it.  But is it true? Well I have a legal training – of sorts – and during that training I did discover some evidence for the proposition.

Two things that made me wonder when I studied law were were the doctrine of consideration and the rule against hearsay. I argued here that the doctrine of consideration is completely redundant. One could remove it, and possibly very slightly amend its ‘adjacent’ principle in the tests of the establishment of contract – the intention to create legal relations – and we could all go on with our lives relieved of a few hundred thousand pages of otiose nonsense about when the rule should and should not be applied.  That’s roughly what they do in European contract law.

Ditto the rule against hearsay.

The rule arises from the casual observation that it is easy for crims or those accusing people of criminality to make stuff up and to have people back them up. “Your honour someone told me they saw Joe at a barbie at the time the robbery was on.” The point of the rule against hearsay is that this evidence isn’t as good as it could be – because what you really want is for the person who claims to have seen Joe to testify before the court and be subject to cross examination.  But what if the person can’t be there?  Well there are a thousand rules which tell you that sometimes it’s OK and sometimes it’s not OK to adduce the evidence.

It seems to me bleeding obvious that there should be no blanket prohibition on hearsay, but that it may be appropriate in some circumstances to render it inadmissible generally by discretion of the judge.  The principle is as set out above, that there are situations where the evidence may be more persuasive to a jury than is warranted – but that’s a judgement that is a big call – since juries are supposed to be safeguards and so on, one ought generally to be able to warn them of the risks.

As it is, the rule against hearsay operates like a kind of loose canon, removing evidence from the court in some cases (where the plethora of exceptions aren’t operative) and allowing it in others.  The worst case I know of, was an appeal to the Privy Council from Jamaica in around 1960.  I thought the case was called R v Spark or R v Sharp, but I can’t find it on a quick search.  Anyway, from memory, a young girl was raped and subsequently died and a black man was accused.  The girl said before she died that it was a white man what did it.  But that was inadmissible.  Because she couldn’t be cross examined on the evidence.  Clever huh?  Can’t let the principle of the accused getting the benefit of the doubt or the court getting to the truth get in the way of a rule now can we – not if there is no exception to the rule in previous cases.

In the upshot as I recall, the Privy Council let the guy off – but on some other grounds. And the whole farce should have been ended at the first trial.  Last weekend I was dismayed to read that similar idiocies remain.  Thus in this story:

Charity worker Marea Yann, 70, was found dead in an armchair by her gardener in September 2003. Her son-in-law, Joseph Unumadu, was charged with her murder but was acquitted in the Supreme Court earlier this month.

Mr Unumadu, 52, was accused during an inquest and the subsequent trial of killing Mrs Yann because she had sided with her daughter Pauline when the couple’s 13-year marriage broke down.

In acquitting Mr Unumadu after only five hours of deliberations, the jury disregarded evidence from a friend of the Nigerian-born man that he had confessed to killing Mrs Yann.

However, other evidence could not be heard by the jury after it was ruled inadmissible on the grounds that it was hearsay, or could not be tested by questioning the person who had made the statements, in this case Mrs Yann.

This included evidence by a friend of Mrs Yann’s that Mrs Yann had told her that Mr Unumadu had told her during a phone call that he would kill her.

Also banned was a claim by Mrs Yann’s son Jeff that his mother had told him Mr Unumadu had assaulted her by grabbing her around the throat. Mr Yann also claimed Mr Unumadu then tried to attack him with a knife when he confronted him over Mrs Yann’s allegations.

In fact in other states they’ve made a bunch of rules that might have avoided this outrage.  But that’s only a ‘might’. Because, as is the way with these things, there are a bunch of rules before the obvious is done and the matter is decided on its merits by a judge.  The hearsay has to fall within a specific exception to the rule against hearsay and then a judge has to rule that the probative value of the evidence outweighs its prejudicial affect.

In my submission your honour, that should be the only criterion on which hearsay or any other evidence is withheld from the jury (subject to any other principles not relevant here – eg national security etc).

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31 Responses to Hearsay

  1. Jason Wilson says:

    Nicholas – I don’t have any legal training so this is simply a clarifying question. Would opening up the admission of hearsay to the discretion of judges simply shift the problem to the creation of a bunch of rules governing how that discretion should be used and/or create a procedural problem where lawyers argued over whether or not discretion should be exercised in particular instances. Also, wouldn’t removing it in general disdvantage defences as against prosecutions?

    No doubt there are simple answers to this, but like I said, I m a rube when it comes to the law.

  2. Ken Parish says:

    Nicholas mentions that European civil law does not involve a requirement for consideration for a valid contract. European law also does not exclude hearsay evidence in criminla law proceedings. I have for a long time regarded it as vastly superior to the British system that Australia unwisely (though for obvious cultural/historical reasons) adopted.

    Evan Whitton’s criticisms of the Australian/British legal system are overstated and in some ways misconceived, but he is on the right track. I’m sure there are other lawyers than myself who share this view, though I acknowledge it’s a fairly radical one for a lawyer. Our criminal legal system is almost completely unrelated to either seeking truth or achiveing justice on any intelligible defintion of the concept. Some may regard it as fortunae that I have deliberately never practised as a criminal lawyer nor taught criminal law!

    The European system is usefully summarised in this article by Jean-Marc Baissus. Here’s an extract where he deals among other things with the question Jason raises:

    The Rules Governing Evidence

    Here I will start again on the basis of common-law rules governing evidence. I believe that one may claim that these rules are essentially of an exclusionary nature. This is the central contention of Mr. Whitton, who seems to consider such exclusions as abusive, especially where it comes to the jury. But this is the essence of an accusatorial, or party-led procedure: the parties are the masters of the limits they choose to set to the freedom of the judge. The judge is impartial, but within given boundaries.

    Juries in the sense of a panel of lay judges entitled to decide alone on a given issue do not exist in continental procedures. They are totally absent in civil proceedings. They are unknown in the criminal procedure of Luxembourg, Netherlands or Spain. Where lay judges are involved, it is always in the capacity of assessors of the professional judges, and therefore they cannot be denied any access to information. In fact there is a frequent tendency to be critical towards such non-professional participation, because of the lack of technical skills and the risk of emotional reactions. This is compounded by the fact that lay judges do not give reasons for their decisions, which is also a remark that may be directed at common-law juries.

    This being said, the consideration of the rules governing evidence can be observed under four headings: the gathering of evidence, the weighing of evidence and the two special topics of expert opinion and the intervention of the victim in the criminal trial. This will lead to a few cursory remarks regarding evidence in civil cases.

    The gathering of evidence

    Of course the core of continental criminal proceedings rests on the presumption of innocence and therefore imposes the onus of proof of guilt on the prosecution. This central rule has to be stressed in view of the surprisingly frequent misconception in Common Law countries that the “Napoleonic” codes burden the accused with the demonstration of his innocence, toiling as he is supposed to be under a presumption of guilt.

    The presumption of innocence predates the French Revolution and has been constitutionally affirmed by the 1789 French bill of rights. Today, the presumption is universal and moreover enforced by art. 6-2 of the European Declaration of Human Rights, which is enforceable over the jurisdiction of national courts.

    In contrast to civil law (see below), the continental penal law of evidence is not regulated in penal matters. There are no special rules on the way evidence may be collected or what should qualify as evidence in court. It is a logical consequence of the duty to search for the material truth handed over to a qualified and impartial judge. In penal matters the facts may be proven in any way, and the judge accepts any element provided it has been lawfully obtained and the accused has had an opportunity to discuss it in court. Hearsay is not as such deemed inadmissible.

    In France, Netherlands and Belgium, for instance, every scrap of evidence has to be put down in writing, thus building up the “dossier”. This dossier is entirely disclosed to the defence before the hearing. The result is that the actual trial is much speedier, and only based on the evidence considered as relevant by the court and contending parties.

    The problem of unlawful evidence only arises where it is likely to be detrimental to the accused. In continental law, unlawful evidence is that gathered by violating the law, e.g. through provocation, violence, violation of privilege against self-incrimination. In France or Germany, if the means of evidence are not restricted, very strict conditions are laid for the search and administration of proof. For instance, incriminating evidence found during an irregular search of private premises is inadmissible. Generally speaking, continental procedure prohibits all directly coercive measures to obtain evidence, as well as the use of agents provocateurs, the resort to lie detectors or narco-analysis (contrary to U.S. investigation practices). On the other hand it seems, at least in English case law, that evidence is excluded if unreliable, but not necessarily for the simple reason that it may have been collected unlawfully. This is apparently at the discretion of the court, which is not supposed to err towards the supervision of police activities. In other words continental courts generally apply what the United States procedure calls the fruit of the poisoned tree doctrine.

    The presumption of innocence is enlarged by a general right to silence, even if Mr. Whitton contends that this protects only the guilty, and the correlated privilege against self-incrimination.

    But the continental approach to these rights of the accused is maybe more cynical or realistic, according to the moral standpoint adopted, and sometimes goes very far. As a rule the accused does not commit an offence as such if he lies in the action of defending himself.

    Especially he is not required to swear an oath when testifying. It is a privilege for the defendant to use every means at his disposal, barring actual complicity of the defence counsel. The idea is that the judge has never any guarantee that he is being told the truth, but has to trust his wits and the hard evidence which the prosecution is supposed to be able to bring. Witnesses are not “tested” for “credibility”, but simply heard. Of course, false testimony, if demonstrated, is an offence, whilst, if the accused is caught out lying, he has to expect an increased severity of the sentence. Experience shows on the whole that this more “relaxed” approach to the truthfulness expected of private parties and their private counsel does not result in a lesser number of convictions. Continental judicial philosophy is maybe simply more tolerant of human frailty.

  3. SJ says:

    What’s the big deal with consideration? The promissor can always deed the gift.

  4. Ken Parish says:

    “Whats the big deal with consideration? The promissor can always deed the gift.”

    Well yes, but it’s a pointless technicality that only serves to make/keep lawyers rich, isn’t it? If there’s clearly an intention to create binding legal relations, why the need for consideration as well unless you spend money for a lawyer to help you draft a valid deed? I know it’s not all that difficult, but technical enough to defeat the average person’s clearly expressed intention unless they get legal help. It’s a scam.

  5. SJ says:

    …we could all go on with our lives relieved of a few hundred thousand pages of otiose nonsense about when the rule should and should not be applied.

    C’mon, what is this?

    We don’t have “a few hundred thousand pages of otiose nonsense”. What we have is a common law system that runs off precedent. It’s an evolving system, just like pretty much everything else we use. The common law uses precedence, and if you want to put it in a snarky way, there are millions and millions of pages of stuff that establish the precedents.

    A statute can nullify a common law, and that happens a lot too.

    If you want to argue the case against consideration, argue it from first principles, and explain why the citizens of Oz would be better off if a new statute struck down consideration in contract law judgments.

  6. SJ says:

    Ken Says:

    Well yes, but its a pointless technicality that only serves to make/keep lawyers rich, isnt it?

    I strongly disagree with this.

    If I say “Ken, your’re a great guy, I’ll give you a million bucks when I get my super check”, I wouldn’t want that enforced under contract law. I wouldn’t say it to you in the first place, but I still wouldn’t want it enforced against silly people who make such promises. You’re surely familiar with the history of such cases.

  7. SJ says:

    Ken Says:

    If theres clearly an intention to create binding legal relations…

    So what establishes the intention?

    A deed will clearly do so. Consideration is a factor that might do so.

  8. Ken Parish says:


    With respect, your example ignores the fact that the common law of contract, like European civil law, requires the element of intention to create legally binding relations. A glib, off the cuff promise to “give you a million bucks when I get my super check” would be unlikely to clear that hurdle in either system. That’s why the common law requirement for consideration is a scam – it’s redundant. If a promissor INTENDS his promise to be legally enforceable, then why shouldn’t it be? Moreover, the requirement for consideration doesn’t even avoid the need for decisions in grey areas i.e. where it might not be absolutely certain whether there was such an intention. And that’s especially the case when, as you’re no doubt aware, the common law of contract only requires that consideration be “sufficient” but need not be “adequate”, and that sufficient may be just about anything that can be measured/valued in economic terms e.g. a peppercorn.

    Now of course there are far more complex and erudite academic discussions of these isssues, but to be blunt that’s what they come down to.

    BTW I wouldn’t advocate that we adopt European civil (as opposed to criminal) law generally. There’s quite a bit of law and economics research which suggests that the less interventionist, mostly privately determined priorities of the adversarial common law system in areas of private civil law appears to result in superior economic performance over time (although it’s not impossible that such research is ideologically skewed).

    Nevertheless, I reckon there’s a strong argument for abolishing the common law requirement for consideration in contract law, and more radically I reckon the European criminal law system generally is vastly superior to that of commmon law countries.

  9. SJ,

    Ken has given you a complete answer to your question – from what I can see. If you strongly disagree with it, that’s your prerogative, but there’s not much more to be said.

    But here’s another go.

    The doctrine of consideration is redundant. It serves no function. That – it seems to me is an argument from first principles. If it isn’t I don’t know what an argument from first principles would look like. It’s true that the doctrine can be got around – with deeds for instance. And you can get inside a Masonic Hall if you know the secret handshake. So what?

    The actual function of the doctrine – it’s only real and integral function – is that it’s a kind of secret tripwire whereby two people might think they have a contract, they have offer, acceptance and an intention to create legal relations, but the legal system then lets them down if consideration doesn’t pass between them. Turns out they should have seen a lawyer.

    And yet lawyers – I’m guessing, perhaps wrongly, that you are one – don’t see this – providing evidence of Keynes’ saying. This is the kind of thing that lawyers should be trained to see – and if they can’t be trained to see it, they should at the very least not be trained not to see it.

    You say things like that it’s a function of common law being precedent driven. Well the common law is evolving and rendering lots of things redundant – like the doctrine of civil death for instance (from memory). It just that while many things evolve and are swept away – even by judges – this one hasn’t gone, perhaps because it never went through a period (like civil death) where it was very rarely referred to and after a sufficient period of time there are often enough judges prepared to do what they do in a Monty Python sketch I recall – which is to just stop it because it’s become too silly.

    But I’m not fussy – I’m perfectly happy for someone else to stop the Python sketch the judges feel compelled to go on with. The Parliament can say that the sketch has got too silly to continue – and remove the doctrine and do any residual cleaning up with any tests of intention to create legal relations that remain.

  10. SJ says:

    Ken says:

    If a promissor INTENDS his promise to be legally enforceable…

    Again, what establishes the intention? This is getting repietitious and boring.

  11. Ken Parish says:

    If you’re a lawyer you can look up the reams of case law for yourself. if you’re not, say so and I’ll see if I can grab some reasonably succinct summary.

  12. SJ says:

    Nick Says:

    …they have offer, acceptance and an intention to create legal relations, but the legal system then lets them down if consideration doesnt pass between them.

    Give me an example. Something in which the intention to create legal realtions is established independently of either consideration or a deed.

  13. SJ says:

    If youre a lawyer you can look up the reams of case law for yourself.

    I’m not a lawyer. Nevertheless, I’ve substantial training and experience in law. Contract law in particular. That’s why I find this discussion fairly bizarre.

  14. Ken Parish says:

    Here’s an extract from Halsbury’s Laws of Australia on intention to create legal relations in contract law. I’ve left out the many hundreds of case citations because it would make it far too long. I should note that I find it difficult to understand your belief that it is “bizarre” and unbelievable that a system of contract law could exist without a requirement for consideration. More than half the world (i.e. the part with a European rather than British-based legal system) exists perfectly well without any requirement for consideration.

    [110-920] Intention to create legal relations essential In addition to agreement1 and consideration,2 a third element is necessary to a contract: an intention to create legal relations.3 The requirement applies to implied as well as express contracts.4
    There are agreements between parties which do not result in contracts within the meaning of that term, as where two parties agree to take a walk together, or where there is an offer and an acceptance of hospitality.5 Moreover, an agreement cannot be held to be a contract in the face of the parties intention that it should not give rise to legal rights and obligations.

    [110-922] Relationship with agreement and consideration There is overlap between the issue of intention to create legal relations and the issues of agreement and consideration.1 A binding contract cannot be found where the parties to negotiations do not intend to be bound until further (and in that sense essential) terms of the bargain are agreed.2 The more firm the intention to create legal rights and obligations immediately, the more probable it is that the terms of agreement will be complete, certain and particular; conversely, incompleteness, vagueness and generality of terms may point to an absence of contractual intent.3 However, such situations are more commonly dealt with under the rubric of uncertainty and completeness.4 If there is no agreement (on either basis), but benefits have been conferred and accepted, there may be an obligation to make restitution.5
    The main concern of the present discussion is with cases where, notwithstanding that the requirements for contract formation appear to be fully satisfied, it is alleged that the agreement was not intended to be enforceable as a contract.

    [110-925] Intention may be express or implied Even in the present context,1 the test of intention is objective2 and it is not usually open to one party to prove that subjectively its unilateral intention was that legal relations should not arise.3 A party seeking to enforce a contract is not normally required to prove objectively a positive intention to contract,4 but a common positive intention not to contract will be respected.5 In all other cases the issue of intention to contract is determined as an inference of fact.6 The relevant intention may be express or implied.7
    In the drawing of the inference two rebuttable presumptions apply.

    First, in the case of consensual relations between close friends or members of a family,8 it will be more easily inferred that agreement and consideration were not accompanied by contractual intent and there is a presumption of fact to this effect.9

    Second, in the case of parties at arms length, particularly in commercial agreements,10 it will readily be inferred that agreement and consideration were accompanied by contractual intent and there is a presumption of fact to this effect.11

    Although the question is always one of the parties intention, express or implied, it is not possible to bring all classes of cases within the contrast between family, social and domestic agreements on the one hand and commercial agreements on the other.12 Moreover, the ability to formulate acceptable rules to prescribe the kinds of cases in which an intention to create legal relations should be found to exist and the utility of using the language of presumptions have been doubted.

    [110-930] Presumption that such agreements held not binding The law recognises a rebuttable presumption of fact (based on the experience of life) that relatives, such as husband and wife and parent and child, do not intend their agreements to be contracts, preferring instead to rely merely on family ties of mutual trust and affection.1 On particular facts, the justification for the presumption may not exist and so the presumption may not arise, or may be rebutted.2
    Where the presumption applies, and is not rebutted, the agreement will not be enforceable as a contract,3 even though there are mutual promises, or what, as between other parties, would constitute consideration for the agreement.4 Breach of such an agreement does not attract contractual remedies.5

    To the extent that these decisions are based on the view that the small courts would have to be multiplied one hundredfold if such arrangements were held to result in legal obligations,6 or the prejudice which the common law has shown towards married womens contracts,7 they may need to be reconsidered in the light of modern procedures dealing with vexatious litigants in relation to agreements which no reasonable person would regard as having the force of law,8 and emancipation of women by statutory reform of the common law on capacity to contract.

    [110-935] Rebuttal of the presumption In many cases agreements between husband and wife have been upheld as contracts.1 Moreover, in the case of promises to transfer significant property interests, or to remunerate at a substantial rate, persons in a family relation, or persons who establish a domestic relationship, agreements have been upheld as contracts where one of the parties has undertaken or performed onerous obligations for family members or left secure financial arrangements in other countries in order to establish the domestic relationship.2 The presumption has been rebutted in other cases as well.

    (C) Commercial Agreements
    The paragraph below is current to 01 June 2006

    [110-940] Presumption that parties intend to be legally bound The law recognises a rebuttable presumption of fact that in commercial agreements the parties intend their agreement to be attended by legal consequences and the onus of establishing that a commercial agreement was not to create legal relations therefore rests on the party so contending.1 However, this presumption will only be applicable to an agreement which otherwise satisfies the requirements for a binding contract.2 Accordingly, if it is clear that the parties never reached a concluded agreement the presumption will not apply, and the party who contends that there is no contract will not be required to prove as a fact that the relationship (such as it exists) was not intended to be attended by legal consequences.3
    Only in unusual circumstances4 will the presumption be rebutted.

    [110-945] Express exclusion An express exclusion of contractual intention may be relied on to rebut the presumption that a commercial agreement is intended to be legally binding, but the words used must be clear and unambiguous.1 Where parties are prepared to rely on non-legal sanctions (for example, their ongoing commercial dealings with each other) as an inducement to performance, so called honour clauses which declare that an agreement is not to be legally binding may have the result that the agreement is binding in honour only and not as a contract.2
    An intention that a particular agreement is not to be legally binding need not be found in the agreement itself, but an allegation that a commercial agreement was subject to a separate (collateral) agreement that the contract was not to have legal force will be essential if a plea to the effect that the agreement was not intended to be legally enforceable is to have substance.

    [110-950] Promotional puff The extravagant, non-specific language of an advertiser may fail to satisfy the criteria of contractual obligation for the reason that a contractual obligation was not intended.1
    Where items with little or no intrinsic value such as promotional coins, posters, cards and so on are offered as inducements to the purchase of goods or services, the suppliers description of the items as gifts or prizes is not conclusive of the absence of an intention to enter legal relations in relation to the items in question.2 The words used must be balanced against the overall contractual setting, and, in particular, whether it is commercial in character.

    (D) Particular Situations
    The paragraph below is current to 01 June 2006

    [110-955] Government schemes and agreements Where a government or governmental agency administers a scheme, plan or policy involving the prospect of governmental subsidies or other assistance to persons who satisfy stated criteria, and a person aggrieved by a refusal of benefits seeks to enforce the scheme, plan or policy as a contract, it may be held that there was no offer of contract in the announcement of the scheme, plan or policy.1 Alternatively, it may be held that there was no consideration for the promise to pay.2 However, even if offer, acceptance and consideration look to be present, the scheme or arrangement will fail as a contract unless it was the common intention of the parties to enter into legal obligations, mutually communicated, expressly or impliedly.3 The scheme may therefore fail as a contract, due to the absence of an intention to create legal relations.4
    Nevertheless, in a commercial context the argument that a governmental agency or statutory corporation did not intend to be contractually bound is today unlikely to succeed.

    [110-960] Voluntary associations and registered companies The constitutive rules of an association may be enforceable as a contract,1 if this was the intention of the parties.2 However, if the parties did not intend the rules to create legal relations breach of them will not be actionable as a breach of contract.3
    In the case of registered companies, a companys constitution (if any) and any replaceable rules that apply to the company have effect as a contract:

    between the company and each member; and
    between the company and each director and company secretary; and
    between a member and each other member,
    under which each person agrees to observe and perform the constitution and rules so far as they apply to that person.4 This binds each to observe and perform the provisions of the memorandum and of the articles so far as applicable to the person in question and obviates the necessity of any inquiry as to whether the general law requirement of contractual intent is satisfied.

  15. SJ,

    Can you provide me with a single case in which there is offer, acceptance, intention to create legal relations with those principles being sensibly applied which fails for consideration that would not be as fairly or more fairly decided the other way.

    If you can then you’ve falsified Ken’s and my claim that consideration is redundant.

  16. Tom Noonan says:

    With respect to the ban on hearsay evidence, the problem is that there are too many corrupt and narrow minded essentially stupid judges, and you gotta keep them on a short leash.

    I hold this truth to be self-evident, looking at eighteenth century inquisitorial precedent, not to mention twentieth century military tribunals, and indeed my own experience of jury service, and judges I met after hours as a taxi driver.

  17. Alphonse says:

    I wouldn’t mind if the misleading term “valuable consideration” meant what it said (so as not to extend to a derisorily technical $1.00), or, better, if it said and meant “commensurate consideration”.

    This High Court case from 2006 which garnered a bit of mainstream press coverage contains a good examination of intention to create legal relations in the tort of deceit, which is closely related to the contractual claim of deliberate misrepresentation. Hayne J in particular identifies an underlying principle common to tort and contract which denied a remedy to this plaintiff.

  18. SJ says:

    Back again.

    Ken, since we’re quoting texts, I’ll quote Carter and Harland, Contract Law in Australia

    Why consideration? No legal system can countenance the proposition that any and every promise shall impose legal obligation. All insist on some indicia that a promise is to give rise to legal, as distinct from purely moral or commercial, enforceability. Some legal systems distinguish between promises which are legally binding and those which are not by reference only to the seriousness of intent which characterises a promise, a test which can be satisfied by a gratuitous promise. While the common law insists upon an intention to be bound by a promise, it holds that an agreement is not a contract unless consideration is present. It follows from the conception of contract as an institution accepted by society as a means of giving legal effect to promises that some criterion for enforceability must be developed within the law of contract itself. “Consideration” was the criterion adopted in English law and accepted in Australia. In Coulls v Bagot’s Executor and Trustee Co Ltd Windeyer J observed: “Whether we like them or not, the rules relating to consideration seem to me a stubborn part of our law. They cannot be displaced by courts by head-on collission”.

    More than one rationale has been offered for consideration. The promisee under a gratuitous promise has a less compelling claim on the law to enforce the promise than a promisee who “bought” a promise by furnishing consideration for it. Enforcement of gratuitous promises could prejudice those, such as creditors, who have given valu to the promisor. The doctrine also protects, deservedly or not, the person who makes a gratuitous promise rashly and subsequently has regrets.

    To the modern reader, the rules which we discuss in this chapter, and the difficulties in applying those rules, not to mention defining the concept itself, raise serious doubts as to the utility of the concept in the modern world. Perhaps this disquiet arises from three misconceptions. First, it is probably misleaing to conceive of consideration as a single concept which may be defined succinctly. In fact, the concept seems better understood as a description of a not wholly precise or internally consistent set of rules. Second, even though consideration is a criterion for enforceability, consideration should not be regarded as the sole criterion. The reality is that promises which are not supported by consideration are frequently enforced, although important questions arise as to whether these promises are enforced as contracts (or under contract law). Third, the law of contract is concerned with much more than the enforceability of promises. Many contracts, particularly those of consumers, involve the exchange of goods or services for money and the question of consideration is usually not controversial in these contracts.

    The reason I find the discussion bizarre is not that I can’t conceive of a completely different legal system which doesn’t require consideration, but rather you’re talking about making this modification to our existing legal system. In our system, consideration is one of the elements which determine whether or not a contract has been formed and therefore whether contract law applies.

    Nick, you’ve asked for “a single case in which there is offer, acceptance, intention to create legal relations with those principles being sensibly applied which fails for consideration that would not be as fairly or more fairly decided the other way.”

    I would quibble that consideration was part of “intention to create legal relations”, and that it’s much harder to show the intention in the absence of consideration. However, I’ll give you a case.

    Baltic Shipping Company v Dillon [1993] HCA 4; (1993) 176 CLR 344 (10 February 1993)

    Passenger pays for ticket on ocean cruise. Ship sinks, passenger wants money back. Passenger gets money back because of a finding of failure of consideration. (It’s way more complicated than that, but that’s the issue you were looking for).

  19. Ken Parish says:


    If if you had actually read the judgments in the Baltic Shipping case you cited, you would have discovered that the plaintiff respondent lost on the total failure of consideration argument. She retained only the damages she had been awarded for distress etc flowing from the appellant shipping line’s negligent failure to ensure a safe cruise i.e. damages based on the validity and enforceability of the contract (not its failure for want of consideration). In other words the case has nothing to do with issues of consideration: they were argued but ultimately failed. If anything this case is actually a good argument for the point Nicholas and I have made: consideration is a redundant element in contract law whose function is adequately performed by other elements. Contract law could be simplified without any unfairness by abolishing it.

  20. SJ says:

    OK, that was poor research on my part, and I shouldn’t have let Nick wriggle out of the original question by turning it around.

    You’re a lawyer, though, Ken, so I’ll ask the question of you: Give me an example. Something in which the intention to create legal realtions is established independently of either consideration or a deed. Something which shows clearly that consideration is redundant.

  21. Ken Parish says:

    They are conceptually separate elements in the formation of a contract by definition (albeit sometimes overlapping as the Halsbury’s extract explained). Thus the general situation is that intention to create legal relations is established separately from consideration. In the common law of contract both must be present for a valid contract. Thus pretty well every example cited in Halsbury’s is an example where intention was established as a separate element from consideration (even though by definition under a common law system both must be present).

  22. SJ,

    Honestly I’ve no idea what you’re arguing. And it doesn’t seem that you have any idea what I’m arguing. I think this sketch is too silly and I think we ought to stop it.

  23. SJ says:

    Nick Says:

    Honestly Ive no idea what youre arguing. And it doesnt seem that you have any idea what Im arguing.

    It’s pretty simple, isn’t it? You and Ken have argued that consideration is redundant. I don’t think that it is, in our current legal system.

    Ken doesn’t want to adopt a different legal system, and you may or may not want to adopt something like the Uniform Commercial Code, but I’m asking the two of you to explain your reasoning.

  24. SJ says:

    Ken Says:

    They are conceptually separate elements in the formation of a contract by definition (albeit sometimes overlapping as the Halsburys extract explained). Thus the general situation is that intention to create legal relations is established separately from consideration. In the common law of contract both must be present for a valid contract. Thus pretty well every example cited in Halsburys is an example where intention was established as a separate element from consideration (even though by definition under a common law system both must be present).

    Whilst they are to some degree separate, you’re missing the point that there’s a heirarchy. If there’s agreement, consideration and intention to create legal relations, there’s a contract.

    You’re saying that agreement and intention is sufficient. I think that that’s crap. You can’t knock out one of the elements. Why not knock out the agreement part?

  25. SJ says:

    The fact the neither you, Nick, or you, Ken have yet come up with a even a hypothetical which supports your case re consideration is a great difficulty for you both.

  26. Ken Parish says:


    You’re right in the sense that very few cases turn on the issue of consideration (as you’ve discovered). That may well be because very few people make deals where there’s nothing tangible in it for them, and where they do it isn’t worth litigating it.

    Moreover that is actually your best argument: if abolishing consideration rule isn’t going to make much difference anyway, why do it (on the precautionary principle)?

  27. Thomas the Tout says:

    Gentlemen. Please! There is much about our legal system that needs improvement – should we allow some matters to be dealt with by ‘the inquisitorial system’ rather than the adversarial? – can we remove the entrenched attitude of superiority from Court staff and officials? – should the punishment fit the crime?
    But the working day is too short, and I have to try to make a profit from my small business. As to the concept of consideration, when time permits I will read the arguments. But for now, I side with SJ.

  28. SJ says:

    I feel that I need to explain this statement a bit better:

    Whilst they are to some degree separate, youre missing the point that theres a heirarchy. If theres agreement, consideration and intention to create legal relations, theres a contract.

    Youre saying that agreement and intention is sufficient. I think that thats crap. You cant knock out one of the elements. Why not knock out the agreement part?

    Carter and Harland say it better than I could:

    Intention to create legal relation an essential element. Consideration and intention to create legal relations are interrelated, the former tending to suggest the latter. Does the furnishing of consideration, as Williston argued, import an intention that the promise so “bought” be legally binding and so render superfluous an independent requirement that the latter element exist? Conversely, is consideration merely one form of evidence of intention to create legal relations not warranting the status of an independent element of a contract? The latter question was answered “no” at an early stage. The former question is answered “no” in this chapter. Therefore, in addition to agreement and consideration, a third element is necessary to a contract: an intention to create legal relations.

    That’s what I meant by “heirarchy”.

    Agreement is necessary (in most but not all cases), and if there’s agreement, then consideration is necessary (in most but not all cases), and if there’s agreement and consideration, then intention to create legal relations is necessary as the final step.

    The intention to create legal relations is an independent thing, but only insofar that if it’s absent, there’s no contract.

    Nick, if you really want to get rid of “a few hundred thousand pages of otiose nonsense about when the rule should and should not be applied”, you should be proposing a codification of contract law in Oz (perhaps along the lines of the US Uniform Commercial Code, perhaps not), preferably involving legal scholars, which precludes people like you and me. Note that I would not object to such a codification per se, but it could prove to be a difficult project to sell.

  29. SJ says:

    …preferably involving legal scholars, which precludes people like you and me.

    Upon reflection, maybe not. I wrote some of the bits in Part IIIA of the TPA, as part of a submission from the NSW govt that subsequently got written into the bill, and I think that the result is (slightly) better than would otherwise have been the case.

    There’s no harm in anyone criticising the existing system, and non-lawyers can have a role to play.

    I guess that in this particular area, law, I’m very conservative.

  30. Framar says:

    I stumbled accross this when making an internet search in regards to the Unumadu/Yann case. By the way its James Unumadu(not Joseph), however, this person does have more than one identity, so anything is possible. Joseph is his long departed from this world brother, but with the the scams Mr Unumadu has pulled in his time nothing does shock or surprise me.
    I am not in the legal profession and my knowledge only extends as far as watching television and a one time companion for a friend who diddled centrelink. I guess thats why I find the acquital of this case because of “hearsay” evidence so alarming. Without sounding too judgemental, I have known both the Unumadu and Yann family for around 20 years. My carpel tunnel does not allow me to write about all the lies, scams and deception that this man has done over the years, as well as fool government departments with false identities.
    However, I do have a point to all this. I learnet recently when I escorted a friend to court who had received some over payments from Centrelink, that circumstances for 15 years leading up to the crime were explained in detail and were crucial in her punishment. I admit it was no murder case, nor a jury present, but if so many insignificant details can be heard to try and justify her actions, couldnt that be classed as “Hearsay” as well. I just dont get it.
    We dont have capital punishment here. If there was a chance we could electricute the wrong person fair enough, dig deeper. But only 5 hours in court. Maybe he didnt do it? Maybe he did? We can all have our thoughts but isnt it funny how everbody that knows him knows he did it. Before he was even arrested.
    I dont even have the satisfaction that he has to live with his own consious because he has none.
    It is a pity there are so many bad people that walk free. I bed Mr Unumadu is sipping Pina Colada’s right now in Vegas with O.J.Simpson. Anyway hope I didnt bore anybody but I better get back to work otherwise I might go to jail for not paying a parking ticket or something serious like that.

  31. Pingback: Club Troppo » Meanwhile back in Government . . .

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