Charge on Promise only with Consideration for it
A guarantee contained a promise to pay the debt of another, but made no mention of the consideration given for the guarantee. Lord Ellenborough CJ said: ‘the clause in question in the Statute of Frauds has the word agreement. And the question is, whether that word is to be understood in the loose incorrect sense in which it may sometimes be used, as synonymous to promise or undertaking, or in its more proper and correct sense, as signifying a mutual contract on consideration between two or more parties? The latter appears to me to be the true construction of the word, to which we are bound to give its proper effect; the more so when it is considered by whom that statute is said to have been drawn the person to be charged for the debt of another is to be charged, in the form of the proceeding against him, upon his special promise, but without a legal consideration to sustain it, that promise would be nudum pactum as to him. The statute never meant to enforce any promise which was before invalid merely because it was put in writing. The obligatory part is indeed the promise, which will account for the word promise being used in the first part of the clause, but still in order to charge the party making it, the statute proceeds to require that the agreement, by which must be understood the agreement in respect of which the promise was made, must be reduced into writing. And indeed it seems necessary for effectuating the object of the statute that the consideration should be set down in writing as well as the promise; for otherwise the consideration might be illegal, or the promise might have been made upon a condition precedent, which the party charged may not afterwards be able to prove, the omission of which would materially vary a promise, by turning that into an absolute promise which was only a conditional one: and then it would rest altogether on the conscience of the witness to assign another consideration in the one case, or to drop the condition in the other, and thus to introduce the very frauds and perjuries which it was the object of the Act to exclude, by requiring that the agreement should be reduced into writing, by which the consideration as well as the promise would be rendered certain. The authorities all show that the word agreement is not satisfied unless there be a consideration, which consideration forming part of the agreement ought therefore to have been shown; and the promise is not binding by the statute unless the consideration which forms part of the agreement be also stated in writing.’
Grose J said: ‘what is required to be in writing therefore, is the agreement (not the promise, as mentioned in the first part of the clause) or some note or memorandum of the agreement. Now the agreement is that which is to show what each party is to do or perform, and by which both parties are to be bound; and this is required to be in writing.’
Lawrence J said: ‘and as the consideration for the promise is part of the agreement, that ought also to be stated in writing.’
Grose J, Lord Ellenborough CJ, Lawrence J
[1804] KB 10, [1804] EngR 184, (1804) 5 East 10, (1804) 102 ER 972
Commonlii
England and Wales
Contract
Leading Case
Updated: 31 October 2021; Ref: scu.252315