The orthodox position is that consideration is essential in the formation of a contract as English law does not generally have rules of formality to determine when a contract has been formed. Consideration thus distinguishes between a binding contract which is enforceable and a simple gift which is not. The underlying theory of consideration is however unfortunately not clear.
Consideration is thus essential for the formation of a valid contract.
Value may be given by way of the promisor gaining a benefit or the promisee suffering a detriment . Under the traditional view the scope of consideration is narrow and the doctrine is of key importance in restricting the formation of contracts. Atiyah points out that although the courts often use benefit and detriment analysis the reality is that consideration will be found where there is a good reason to enforce a promise. This argument widens the scope of consideration as allowing a wider category of sufficient consideration but arguably could lead to a reduction in the importance of the doctrine. The decision of the Court of Appeal in this case is of major significance to the theory of consideration.