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Editorial Committee of the Cambridge Law Journal

Cause and Consideration: A Study in Parallel Author(s): B. S. Markesinis

Source: The Cambridge Law Journal, Vol. 37, No. 1 (Apr., 1978), pp. 53-75 Published by: Cambridge University Press on behalf of Editorial Committee of the Cambridge Law Journal

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Cambridge Law Journal, 37 (1), April 1978, pp. 53-75.

Printed in Great Britain.

CAUSE AND CONSIDERATION:

A STUDY IN PARALLEL

B. S. Markesinis

I. Introduction

Students interested in the concepts of cause and consideratio surely, have been struck by two things. The first is the extraord tenacity which has enabled these concepts to survive the atta eloquent critics who have doubted their utility.1 The second equally remarkable ability to accommodate the most divergen parative theories. For the study of the two notions has led so argue that they are, in reality, the same2; others to insist th are totally different3; while yet another school of thought c

1 See, in particular, the 6th Interim Report of the Law Revision Committe

5449 (1937) and the literature it gave rise to notably, Hamson, 54 L.Q.R. Mason, 41 Col.L.Rev. 825; Chloros, 17 I.C.L.Q. 137. For a more recent dis¬

cussion of the concept see, Atiyah, Consideration in Contracts: A Fundamental

Restatement (Canberra, 1971). For literature in the U.S. see, inter alia, Lorenzen, 28 Yale LJ. 621 (1919); Shiller, The Counterpart of Consideration in Foreign

Legal Systems, N.Y. Law Revision Commission, 2nd Ann.Rep. 103 (1936);

Glaser, 46 Dickinson L.R. 12-25 (1941).

In the francophone countries the attack against cause began in 1826 when the Belgian jurist Ernest published his pamphlet La cause est-elle une condition essen-

tielle pour la validite' des conventions^ His view was subsequently developed by

Laurent, in his Principes de droit civil francais, Vol. 16, No. 111 and others then followed. But it was not until Planiol took on the attack in his Traiti 6Umen-

taire de droit civil, Vol. IT, No. 1037 that the concept looked as if it were to b

abandoned. The counter-attack came with H. Capitant's De la cause des obliga

tions (1927) and though many of his views have been subsequently questione the utility of the concept has, on the whole, been accepted. Thus, see th

Travaux of the Commission pour la revision du Code Civil, 1947-48, 277. Th

extensive francophone literature can be found in the Dalloz, Encyclopedie Jurid que, Vol. I (1951 and supplements) under the word cause.

2 See, for example, the older case law of the Supreme Court of the former colon of Cape of Good Hope: Alexander V. Perry (1874) 4 Buch. 59; Tradesmen%s

Benefit Society v. Du Preez (1887) 5 Sup.Ct. 269; Mtembu v. Webster (1904) 2

Sup.Ct. 323. Earlier law, however, had gone the other way. See, Jacobson v

Norton (1841) 2 Menzies 221.

*The case law quoted above, note 2, and the views of Lord de Villiers which had

inspired these decisions came under severe attack by another South African judge,

Sir John Kotze" in his Causa and Consideration in the Roman and Roman Dutc

law of contract (1922). The view that cause and consideration are really differe concepts has been accepted by most cases decided in former British possession in which the Roman-Dutch law played an important part. See, for exampl

Rood v. Wallach (1904) T.S. 187 (Transvaal); Lipton v. Buchanan (1904) 8 New L.R. 49 (Ceylon); Jayawickreme v. Amarasuriya (1918) P.C. 119 L.T. 499. In

Quebec, article 984 of the Civil Code, reproducing article 1108 of the French C.C states in finem that a valid contract requires " A lawful cause or consideration but it is generally accepted that consideration here is not used in the technica sense understood by Common lawyers but as a mere alternative to the wor

53

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54 The Cambridge Law Journal [1978]

taken to doubt whether there is " any point in c consideration, even to contrast the two."

The study of the legal systems of many countri systems of West Germany,5 and Switzerland 6— can be built a theory of contract which ignor cause (as the French understand it) or considerat mon lawyers have come to apply it over the y this is not the proper way to demonstrate that th it can be shown that their abolition would requi some other concept to perform their function therefore, is to discover if the Germanic family adopted other notions or devices which carry out tions that cause and consideration perform for lish law respectively.8 Equally interesting is

French and English law on this point and, it is s best be done by taking cause and consideration, a discovering the specific purposes that each of the can a meaningful comparison be made.

This has been attempted in this article and interesting conclusions to emerge from this s from the outset. First, it will be seen that most the solutions reached by the French law throug cause are perfectly acceptable to English law t country they would be achieved by having recour concepts such as illegality, public policy, unjust e tion and, of course, consideration itself. Secondly similarities can be found not only in the area of but also in the reasoning that lies behind them. not so, the French approach is, invariably, neate

cause. See, for example, H. Newman, " The Doctrine of Cau in the Civil Law " in (1932) 30 Canadian Bar Review 662, 664. For Louisiana

see J. H. Drake in 4 Michigan L.R. 19-41 (1905) but cf. Glaser in 46 Dickinson L.R. 12-25 (1941).

4 See F. H. Lawson, A Common Lawyer looks at the Civil Law (1953), p. 160.

Yet it is doubtful whether too much should be read into this statement since the

learned author has, himself, made some thought-provoking comparative observations in the 2nd edition of Buckland and McNair's Roman Law and Common

Law: A Comparative Outline (1965), pp. 228-236. Equally important to the comparative lawyer are Professor R. David's remarks in " Cause et Consideration," Mdianges Maury, pp. 111 et seq.

5 Para. 145 B.G.B. Both concepts are also unknown to the Scandinavian legal systems.

6 Art. 17, Federal Code of Obligations.

7 Was it not Voltaire who said: * *Si Dieu n'existalt pas il faudrait Vinventer "?

8 That this is so can be seen in Professor von Mehren's work " Civil-Law Analogues to Consideration: An Exercise in Comparative Analysis," 72 Harv.L.Rev. 1009

et seq. (1959). In this article we shall concentrate only on comparative aspects of the two doctrines which have not been discussed in Professor von Mehren's

learned article.

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C.L.J. Cause and Consideration 55

vincing; and it can also be transp from a process of reasoning w elliptical. Even though the pursui not an end in itself, it may lea holds out attractions to teacher and

It has already been intimated th the two concepts under comparis use it as the starting point of this s

II, Absence of Cause 9

A. Synallagmatic or Bilateral Contracts

There is little doubt that cause and consideration represent a ki

of form—a check, one could say, on the unrestricted applicatio the philosophical doctrine of the autonomy of the will whic

prepared to ascribe legally binding effects to the mere coincide

of the wills of the contracting parties. But for these two concep both English and French law would have moved from one extre to another: from an era of extreme formalism to one dominated

by the theory of consensualism. Neither system saw wisdom in suc a volte face and in the concepts of cause and consideration the found the means to avoid it. But though the reasons which led to the introduction of these concepts were broadly analogous, the pro cess of their emergence was quite different. In France the theory of cause was really the product of a prolonged moral and philosophical pre-occupation with the human will which, in law, was allowed to produce effects only if it was externalised for an ascertainable an specific purpose. In bilateral contracts this could only be the presta tion (undertaking) of the other party. Consideration, on the other hand. was devised by commercially-minded lawyers at a time whe they were anxious to escape from their formalistic mediaeval laws and expand their law of contracts. Assumpsit provided the means for expansion while consideration ensured that it remained under control, As Mr. Fifoot has put it: " The * mystery of consideration which the Victorian lawyers found so fascinating " is little ¦" mor than the practical answer to an urgent problem."10 Through different routes cause and consideration thus came to underline

9 Art. 1131 C.C. " V'obligation sans cause, ou sur, une fausse cause, ou sur cause illicite, ne peut avoir aucun effet." In this section we shall discuss the

absence of cause and in the next we shall focus on illicit cause. Fausse cause

can be omitted for it is either a cause erronie which is tantamount to no cause;

or it is a cause simulee which is valid if the underlying, real, cause is licit. See,

Paris, 16 octobre 1956, D. 1957, Somm. 17 and cf. Req. 9 novembre 1891, D.P

92,1,151.

i° History and Sources of the Common Law. Tort and Contract (1949), p. 399.

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56 The Cambridge Law Journal [1978]

the inter-dependence of obligations of the contra

Greek word " swaXkaypa " = exchange, indicates The similarities go further. Though both syst to establish a quid pro quo before enforcing a pr not prepared to allow their judges to inquire int intentions of the contracting parties; hence b understood in the most abstract terms possible. " same thing with consideration" said Patteson

Thomasll and the distinction was clearly drawn and early commentators of the Code Civil. More i of the systems under comparison was prepared t approximate equivalence of the obligations.12 The lying bargain meant that it was for the partie interests as best they could; a result which w

France via a more philosophical route, viz., thro autonomy of the will. " Qui dit contractuel d well-known aphorism echoed the spirit of his age.

True, one finds in the French law the concept noticeable, however, is the degree to which it

Code.13 English law, too, has its peculiarity. Thou not investigate the ** adequacy " of consideration whether it is real or "valuable" (as it is somet called) and will strike down a contract if they are plaintiff has procured the defendant's promise by do to do something which he is already bound to do. to examine the logic of such a rule though one it is somewhat peculiar that such a limitation sho

n (1842)2 Q.B. 851, 859.

12 In England this was firmly established by the end of the sixteenth century. Thus, it was said in Sturlyn v. Albany, Croke, Eliz. 67 that "When a thing is to be done by the plaintiff, be it never so small, this is a sufficient consideration to ground an action " and in Knight v. Rushworth, Croke, Eliz. 469 Anderson C.J. agreed that " the smallness of a consideration is not material." By contrast the old French law, influenced by the canonist ideas of a iustum contrapassum, had adopted a generalised theory of lesio enormis which was progressively eroded and finally reduced to relative insignificance.

13 Apart from article 1118 C.C. and 1674 C.C. the other cases of lision recognised by the Code are of a secondary importance. See, for example, articles 887, 2 C.C; 1854 C.C. By contrast the legislator has not been inactive and, during periods of monetary instability, has intervened in a number of specific instances.

14 Lord Denning M.R. has consistently refused to accept such a rule. In Ward v.

Byham [1956] 1 W.L.R. 496 at 498, he said that *' a promise to perform an

existing duty, or the performance of it, should be regarded as good consideration, because it is a benefit to the person to whom it is given.*' And in Williams v.

Williams [19571 1 W.L.R. 148, 151 he qualified this by adding: " so long as there is nothing in the transaction which is contrary to the public interest."

Attractive as this idea is, however, it is not easy to reconcile it with some of the authorities. That '* an agreement to do an act which the promisor is under an existing obligation to a third party to do, may... amount to valid considera¬ tion " is no longer seriously in dispute. See, N.Z. Shipping Co. v. Satterthwaite

[1975] A.C. 154, at 168.

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C.LJ. Cause and Consideration 57

a system which based its notion of a freely concluded bargain. If such terms why should the law surprisingly, one could add, this come under attack from many q in 1937 the Law Revision Com drastic amendments.

French law appears to have been spared the harshness of such a rule. Indeed, it is only Pothier who raises the issue somewhat indirectly when he states that, M la promesse que je fais a mon debiteur de lui donner quelque chose pour qu'il fasse ce qu'il etait

oblige de fairet est une promesse nutle " on the grounds that it has an illicit cause.15

Now it is submitted that Pothier's statement is ambiguous on a number of crucial points which hinder any further comparative discussion. To begin with, Pothier does not make it clear whether the debtor's obligation is imposed upon him by law (e.g., Collins v.

Godefroy ") or whether it exists as a result of an agreement with the creditor (e.g., Stilk v. Myrick 17) or, finally, whether it is the result of an agreement with a third party. A further difficulty arises

from the fact that Pothier makes the result depend upon whether the debtor demanded (a exigee)18 the promise from the creditor (in

exchange for performing his own, existing, obligation)—in which case the contract is null for " illicit cause "—or the creditor volun¬

tarily made it—in which case it is regarded as a valid gift. It is difficult however, to see why the cause in the first case is illicit unless

one understands Pothier's rather colourless term a exigee as implying the use ol unlawful means or some other legally reprehensible behaviour. Nor is it correct to say (at any rate under the rdgime of the Code) that if the creditor made the promise of his own free

will the contract is a valid gift; for it is not if it does not comply with the formalities prescribed by the law (/.e., it is not in notarial form).

To overcome these difficulties a Canadian commentator has justified Pothier's pronouncement of the contract as void on the grounds

of complete absence of cause.19 If this is correct it would appear that the promise of the debtor to discharge an existing duty

(whether imposed by agreement with the creditor or other person)

is Oeuvres de Pothier (ed. Bugnet) Vol. II, No. 46.

is (1831) 1 B. & Ad. 950. See, also, Glasbrook Brothers Ltd. V. Glamorgan County

Council [1925] A.C, 270. " (l809)2Camp. 317.

18 " Exacted " is the word used by W, D. Evans in his translation of Pothier's

" Treatise " published in London in 1806. 19 H. Newman, op. cit-, p. 670.

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58 The Cambridge Law Journal [1978]

would not constitute a valid cause and Englis would, once again, achieve converging solutions. I ever, whether this interpretation can be suppor the Code, and the lack of any judicial authority o seem to suggest that the problem does not really that it has not occupied the time of the Fren interpretation, therefore, French law differs fro

Subject to the point just made, it is probably that in bilateral contracts cause is the equivalent sideration.20 Both seem to tie together the two it could be said, they represent the price paid by misee) in exchange for the prestation of the debt this inter-dependence of promises a number of quences will flow and to these we must now turn

1. Absence of cause or consideration at the ti of the contract. Given the inter-dependence of prest contracts French law has consistently held that i matter) of the sale has ceased to exist at the time of tract is void (art. 1601 C.C). More precisely, the seller is void for lack of subject matter (objet) of the buyer is void for lack of consideration (cau ing has also been applied in order to hold void a ance of a car when it was proved that, unknown car had been destroyed at the time when the ins made.21 Couturier v. Hastie 22 can offer an Engl the actual justification of the result has been th controversy.23 Whatever view one takes, howeve that the absence of the contemplated subject influenced the outcome of this case. Section 6 of the Sale of Goods

Act supports this conclusion though it has been argued that this section applies only to cases of goods which have perished but not necessarily to goods which have never existed in the first place.

Similar results may also be achieved by both systems where the parties have contracted on the common but erroneous assumption that there exists a certain state of affairs which forms the foundation

of their contract, In Strickland v. Turner,24 for example, the plain¬ tiff bought and paid for an annuity upon the life of a person who,

20 As Domat seems to suggest. See F. H. Lawson's comments in Roman Law and Common Law, 233.

21 See, also, Civ. 22 novembre 1909 D.P. 1910. 1. 407.

22 (1852) 8 Exch. 40; reversed (1853) 9 Exch. 102; reversal affirmed (1856) 5

H.L.Cas. 673.

2<) See, in particular, Professor Atiyoh's views in 73 L.Q.R. 340; 24 M.L and 2 Ottawa L.R. 337.

2* (1852) 7 Exch. 208, Scott v. Coulson [1903] 2 Ch. 249.

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C.L.J. Cause and Consideration 59

unknown to both him and the se died. It was held, that, as at the ti it had ceased to exist, the plaintif whole of the purchase money fro grounds that the money had been

In French law, too, a commonly can nullify a contract. French cou de rente viagere on such grounds lack of cause. A contrat de rente bilateral, between two persons undertakes to pay another (the uncertain period of time. This cou tier lives or, occasionally, for as lon

If, therefore, the parties make su a third person, is alive and it tur them, X was already dead at the t tion is void. The explanation is th the uncertainty which is essentia constitutes the common cause of the transaction.26

Galloway v. Galloway2? offers another parallel. In that case, as is well known, a separation deed between a man and a woman was declared to be a nullity because the parties had signed it on the common but erroneous belief that they were married which, in actual fact, they were not. The agreement was based on the com¬ mon assumption that the marriage was valid and hence, when that turned out not to be the case, the contract was void. An amusing counterpart can also be found in French law in the so-called contrat de remplacement. This peculiar type of contract enabled A, who was about to be drafted into the army, to agree with B that in considera¬ tion of A paying B a certain sum of money B would offer himself as a substitute and serve in A's place. Throughout the nineteenth century such contracts were not regarded as contrary to public policy and were thus held valid to the profit, no doubt, of many tender young men of the wealthier classes. But where A contracted with B on the common but erroneous assumption that A was under

a duty to serve in the Army whereas in fact he was not, the contract was held to be void: there was nothine for B to nerform and A\

25 Art. 1971 C.C. "la rente viagere peut etre constituee, soit sur la tete de celui qui en fournit le prix, soit sur la tete d'un tiers, qui n'a aucun droit d'en jouir."

26 Art. 1974 C.C. " Tout contrat de rente viagere cree sur la tete d'une personne qui etait morte au jour du contrat, ne produit aucun effet." Art. 1975 C.C. " II

en est de meme du contrat par lequel la rente a &£ creee sur la tete d'une personne atteinte de la maladie dont elle est decedee dans les vingt jours de la date du contrat." On these see Capitant, op. cit., pp. 215 et seq.

27 (1914) 30 T.L.R. 531.

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60 The Cambridge Law Journal [1978]

obligation to pay B was thus without cause.28 Onc the result was achieved by having recourse to th and the inter-dependence of the obligations of the

2. Failure of cause or consideration after the c concluded. (a) Total failure of consideration or

Cause and consideration do not exhaust their usefulness once the contract has been formed. On the contrary, they ensure that th balance struck by the parties themselves in the first place is no disturbed during the subsequent life of the contract. Partial or to failure of one of the prestations will thus, inevitably, affect the othe also. In France, this extension of the doctrine of cause well i the post-formation period of the contract is the result of judici activism29 and cannot be found in the older theories on cause. The

following formula has been repeated time and again by the Court o

Cassation: "... dans un contrat synallagmatique, Vobligation de

Vune des parties a pour cause Vobligation de Vautre et reciproquement, en sorte quey si Vobligation de Vune n'est pas remplie, quel qu'en soit le motif, Vobligation de Vautre devient sans cause." 30 The position in England is not dissimilar though it has not alway received the theoretical attention it has been given in France.30a The interdependence of the prestations requires that if one party does not fulfil his part of the bargain, the other be given certain

remedies to redress the balance. What these remedies are will

depend in both systems upon whether the defaulting party h prevented from performing his part of the contract by reason side his control or not. In England, in cases of excusable non formance, the concept of failure of consideration (far less tec than the doctrine of consideration proper) has an important to play. This, at any rate, is true in some of the so-called frus

cases though it has not always been made clear by the cou

Taylor v. Caldwell3* one can find an excellent illustration. It will be remembered that that case firmly laid down th

that if it is proved that the continued availability of a certain or thing is essential to the attainment of the fundamental o which the parties had in mind, then the contract is discharg both parties are released from their obligations if, due to

28 Michet c. Ronet, Req. 30 juillet 1873 D.P. 1873. 1. 330.

29 Not always welcomed by academics. See, for example, H. L. and J. Maz

Lecons de droit civil, Vol. It, A, No. 266.

30 Conjoints Ceccaldi c. Albertini, Civ. 14 avril 1891, D.P. 1891. 1. 329.

soa A recent attempt (by Francis Dawson, 91 L.Q.R. 380) to utilise the concepts of dependent and independent promises to explain the operation of exception clauses

has been convincingly criticised (by Brian Coote, 40 M.L.R. 31 at 41), but it has,

nevertheless, helped to re-emphasize their usefulness in understanding discharge for breach. It is submitted that the French approach illustrates this point most clearly. •" (1863) 3 B. & S. 826.

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C.L.J. Cause and Consideration 61

extraneous reason, the person or exist. The rule, though well-establi can produce awkward results.32 O why should the contract be dischar cent " party from his obligation to

More relevant to our theme, howe the " innocent" party discharged? implies that both parties are disch the subject matter of the contract so since different explanations exi need not pay damages for he has obligation de diligence, to use th terminology, not an obligation de r of the hall and to deliver it to Mr. this obligation he did not breach. released not because of subsequent to pay money and, bankruptcy apa bility in such cases. The reason wh he did not get what he bargained f language, because there has been fa case of Taylor v. Caldwell,33 subst That this is so is demonstrated, in goods. Clearly, the position of the after the contract has been conclud were specific within the meaning

Act 1893,34 and specific in this specific as understood in the rules perty. The buyer on the other hand sideration which, in this case, depe If the property has not passed to h

freed for failure of consideration. Bu in the goods then he remains liabl seller is freed as a result of his ow possible (s. 20 of the Sale of Goods

For example, HarbutVs " Plasticine " L

[1970] 1 Q.B. 447. On this unfortunate c

[1970] C.L.J. 189 and, for a more detaile

221. aa (|863) 3 b. & S. 826.

s. 7. " Where there is an agreem goods, without any fault on the p passes to the buyer, the agreeme

meaning of the word "specific'

Mark, p. 100.

s. 20. " Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is

transferred to the buyer, the goods are at the buyer's risk whether delivery has bsen made or not.'*

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