Variation contracts in Australia and New Zealand: whither consideration?

Abstract

ABSTRACT When faced with unilateral contract variations, the lower courts in Australia and New Zealand have taken different paths regarding the requirement of consideration. In Australia, consideration is still required to be provided by the promisee, but what counts as consideration can include ‘practical benefits’. In New Zealand, the requirement for consideration for variation contracts has essentially been removed. This article will analyse both approaches. It will argue that the ‘practical benefit’ test for consideration is severely flawed, and that the removal of consideration as a requirement for variation contracts is also conceptually dangerous. A removal of consideration for one type of contract (variations) cannot be achieved without bringing it into question for all types of contracts. This article will argue (unfashionably perhaps) that there is still a place for consideration and that the pre-existing duty rule for variation contracts should be retained.