## Facts

- Mr. Lizardi, a merchant, sold bills of exchange to the defendant, Mr. Misa, with payment due the next day.
- Lizardi was indebted to Glyn, Mills, Currie & Co. (C), the claimant bank.
- Lizardi directed Misa to pay the debt owed for the bills directly to C instead of to himself.
- Misa issued a cheque to C per Lizardi’s instructions.
- Upon learning of Lizardi’s severe debts and financial instability, Misa instructed his bank not to honor the cheque.
- C sought to claim the sum of the cheque from Misa, asserting a valid contract existed.
- Misa contested this, arguing the absence of consideration from Lizardi for the payment.
- The dispute focused on whether sufficient consideration existed to support C’s claim against Misa.

## Issues

1. Whether the discharge of an existing debt from Misa to Lizardi constituted sufficient consideration for Misa’s payment of the cheque to C.
2. Whether instructing the payment of a pre-existing debt to a third party can satisfy the requirement of consideration for a valid contract.
3. Whether the arrangement to pay C provided a benefit or detriment necessary to form a binding obligation.

## Decision

- The Court held in favor of the claimant bank, C, finding that sufficient consideration was present.
- It was determined that a valuable consideration may consist of a right, interest, profit, benefit accruing to one party, or a forbearance, detriment, loss, or responsibility undertaken by the other.
- The instruction for Misa to pay C resulted in the discharge of Lizardi’s debt to the bank, which constituted sufficient consideration.
- By taking the cheque, the bank’s legal position altered, entitling it to the sum.
- The discharge of Lizardi’s debt was deemed a benefit and a sufficient change of position, fulfilling the requirements for consideration.

## Legal Principles

- Consideration in contract law requires either a benefit to the promisor or a detriment to the promisee, and must be sufficient, though not necessarily adequate.
- The discharge of an existing debt can be valid consideration if it alters the parties’ legal relations.
- The payment of a pre-existing debt to a third party on the creditor’s direction constitutes valid consideration.
- Consideration distinguishes enforceable contracts from non-binding agreements.
- The sufficiency of consideration depends on an alteration in legal position or benefit/detriment flowing from the transaction.

## Conclusion

Currie v Misa established a definitive test for consideration, confirming that the discharge of a pre-existing debt can constitute valid consideration if it results in a legal benefit or detriment, thereby supporting the enforceability of contracts where the parties’ legal positions are altered.


Currie v Misa (1875) LR 10 Ex 153 (Exch Ch)