Author: Shefali Chaudhary, 2nd year student at ICFAI University, Dehradun.
Citation: 1765 3 Burr 1664, 97 ER 1035
Date of decision: April 30, 1765
Bench: Manfield, Winmolt, Yates & Aston
Original copy: N/A
Issues in question:
- Whether an undertaking to honour a bill of exchange is binding upon a party so undertaking?
- Whether the doctrine of consideration was redundant?
Background of the case:
- Pillans and Rose were merchant dealers in Rotterdam. They consented to accept bills from white an irish merchants on a condition that White needed to ensure mierop and Hopkins, a London firm, would guarantee the bills.
- Mierop affirmed to do as such and guaranteed the pre-existing duty of white to pay pillans. But before the bills were drawn on Mierop, White went insolvent. Mierop refused to abide by the bills and contended that phillons had not given consideration for their guarantee since there was the standard that past consideration is not the decent consideration.
- In this case Lord Manfield held that the doctrine of consideration ought not be applied to prevent enforcement of promises made in trade transactions. This involves immense consequence to trade and commerce.
- The past belief about the requirement for consideration was only for the purpose of grounds of proof. But later it happened to be in writing as in bonds etc there was no issue with the need for consideration.
- As per the principle of statute of fraud, consideration is not an issue among cases related to mercantile.
- Wilmot said that regardless of whether this be a real acceptance or an agreement to accept it should similarly be tied. The agreement to accept the bill ‘to be forced in future’ would be by relation bound because of antecedent relation. He stated that he saw no distinction between itself being before or after the bill was forced.
- Two of the most striking features of English contract laws are the doctrine of consideration and privity. The former overwhelms the terrain of ascertaining which guarantees or agreements attract legal approval.
- Pillan v. Van mierop is a crucial case in the doctrine of consideration. This case is vital to the development of modern contract law, and likewise, modern commercial and financial law.
- If a man consents to do any formal part, the law views it (on account of acceptance of the bill) as if it is really done. This is a commitment to accept the bill, if there was a need to accept it, and to pay when due and they couldn’t thereafter withdraw.
- The judgement in the given case also held the same issue of consideration in the mercantile cases.
- In the Pillans case Lord Manfield and his bold suggestion actually hold significant influence. Whilst his suggestion has not yet been acknowledged his basic philosophy stays pivotal in contract law and supports trade and money now as then.