Currie v Misa (1875) LR 10 Ex 153

Court: Exchequer Chamber, later appealed to the House of Lords

Facts: Mr Misa, the defendant, purchased bills of exchange from Lizardi & Co, a merchant firm. Lizardi directed Misa to make payment for these bills to the claimant, Glyn, Mills, Currie, & Co., a bank to which Lizardi owed a debt. Misa complied and issued a cheque to the bank. However, Lizardi collapsed shortly after the payment, and Misa, upon learning of Lizardi’s financial troubles, stopped payment of the cheque. The bank sought to recover the amount from Misa, claiming that there was a valid contract between Lizardi and Misa and that the discharge of the debt to the bank constituted valid consideration for the cheque.

Issue: Whether the discharge of the debt owed by Lizardi to the bank was sufficient consideration for the payment of the cheque.

Held: The Court of Exchequer Chamber ruled in favor of the bank, holding that the discharge of the debt constituted valid consideration for the cheque. The court found that there was a valid contract between Lizardi and Misa, and thus the bank had a rightful claim to the cheque. The decision was upheld by the House of Lords.

Key Judicial Statement: Lush J stated, "A valuable consideration is a sense of law which may consist either in some right, interest, profit or benefit occurring to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other." He further explained that the creditor (the bank) who receives a cheque in lieu of immediate cash payment may be prejudiced if their title to the cheque is questioned, while the debtor (Misa) gains a benefit from the delay.

💡Leveluplaw: This case solidifies the principle of consideration in English contract law. Consideration can be established by either a benefit to one party or a detriment to the other. The discharge of a debt, even through an indirect payment arrangement, constitutes valid consideration. The ruling emphasizes that contractual obligations can be met through the settlement of existing debts, and parties cannot retract after benefits have been gained based on those obligations.