Currie v Misa (1874) LR 10 Ex 153
Consideration in the formation of a contract.
Lizardi & Co. sold a number of bills of exchange to Mr. Misa, drawn from a banking firm owned by Mr. Currie, and were to be paid on the next day. However, Lizardi was in substantial debt to Mr. Currie’s bank and was being pressed for payment. A few days later, upon paying in the cheque, Mr. Mirsa learned of Lizardi’s stopped payments and outstanding debts, instructing his bankers not to honour the cheque. The question arose as to whether the cheque was payable, particularly as to whether the sale of an existing debt formed sufficient consideration for a negotiable security, so as to render the creditor to whom it was paid, Mr. Currie, a holder for the value of the cheque.
The question arose as to whether the existing debt constituted sufficient consideration for the security so as to constitute a legally-enforceable contract for the creditor.
The Court held that consideration must “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.” (p 162). Thus, there can be no legal contract unless there is consideration in the form of a benefit gained, or detriment suffered arrangement by the parties. On the facts, the Court held that the title of a creditor to a negotiable security on account of a pre-existing debt and transferred to him, bona fide, without any notice of infirmity of title by the debtor is indefeasible. The pre-existing debt did not in and of itself form a sufficient consideration for the negotiable security. Accordingly, there was an absence of any consideration or the making or payment of the cheque by Mr. Mirsa.
Word Count: 291