Pillans v Van Mierop

Facts

Pillans & Rose were in business together as merchant bankers in Rotterdam. They agreed to accept bills from White, an Irish merchant, on one condition. White had to make sure Van Mierop & Hopkins, a big London firm, would guarantee the bills. Van Mierop confirmed that they would do so and would guarantee a pre-existing duty of White to pay Pillans. However, before the bills were drawn on Van Mierop, White went insolvent. Van Mierop refused to honour the bills and argued that Pillans had not provided consideration for their guarantee since there was a standing rule that contracts were only valid if they contained something in return (quid pro quo) Otherwise promising to pay a bill without a return would be a nudum pactum (empty promise).

Judgment

Lord Mansfield held that the doctrine of consideration should not be applied to preclude enforcement of promises made in mercantile transactions.

I take it, that the ancient notion about the want of consideration was for the sake of evidence only: for when it is reduced to writing, as in covenants, specialities, bonds, etc, there was no objection to the want of consideration. And the Statute of Frauds proceeded on the same principle. In commercial cases amongst merchants, the want of consideration is not an objection...

If a man agrees that he will do the formal part, the law looks upon it (in the case of acceptance of a bill) as if actually done. This is an engagement "to accept the bill, if there was a necessity to accept it; and to pay it, when due:" and they could not afterwards retract. It would be very destructive to trade, and to trust in commercial dealing if they could.}}

Wilmot J said,

Notes

References

• G McMeel, ch 2 in C Mitchell and P Mitchell, Landmark Cases in the Law of Contract (2008)
• Grotius, War & Peace, Book II, Ch 9, para 6, 703-4 and 719-20
• Pufendorf, The Whole Duty of Man According to the Law of Nature, Ch IX, para V-IX, 110-1

References

1. G McMeel, ch 2 in C Mitchell and P Mitchell, ''[[Landmark Cases in the Law of Contract]]'' (2008)
2. 17 TR 350.
3. . And they argued, and principally insisted, that for one [3 Burr. 1665] man to undertake “to pay another man's debt," was a void undertaking; unless there was some consideration for such undertaking: and that a mere general promise, without benefit to the promiser, or loss to the promisee, was a nudum pactum. https://opencasebook.org/casebooks/246-contracts-cases-and-materials/resources/6.2.12-pillans-and-rose-v-van-mierop-and-hopkins/