Show Some Consideration, Please

It is rare for a contract to be found to lack consideration. However, in a recent jurisdiction challenge, the High Court held that there was no good arguable case that a security letter was supported by consideration.

Claim for the repayment of a loan

Denning lent USD 1 million to Arcem under a loan agreement, with repayment obligations guaranteed by Main. The loan agreement was governed by English law but did not contain a jurisdiction clause. Following non-repayment by the borrower of the loan, Denning served proceedings on Arcem and Main abroad. He relied on an exclusive jurisdiction clause in a security letter that referenced the loan agreement.

To serve abroad under the civil procedure rules, the court found that Denning had to show the security letter amounted to an enforceable contract. Arcem argued the security letter was not a binding contract and could not support Denning’s service.