The statement provided in the question accurately reflects a fundamental principle of contract law under common law, which forms the basis of Ghanaian contract law as per the sources of law including case law and legislation relevant to banking (e.g., Contracts Act, 1960 (Act 25)). In the context of banking, consideration is crucial in agreements such as loan contracts, guarantees, and customer-banker relationships, ensuring enforceability and compliance with regulations like the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930). Below, I address each part of the question, drawing on practical banking examples from Ghanaian operations, such as those at Ecobank Ghana or GCB Bank, where failure to establish valid consideration can lead to disputes or non-recovery of funds, as seen in cases during the 2017-2019 banking cleanup.

(i) Exception to the General Rule

The general rule that every simple contract must be supported by consideration stems from English common law, adopted in Ghana, emphasizing that a promise without consideration is a mere gratuitous promise (nudum pactum) and unenforceable. However, the key exception to this rule is contracts under seal (also known as deeds or specialty contracts). These are formal contracts executed in writing, signed, sealed, and delivered, which do not require consideration to be enforceable.

• Legal Basis: Under common law applicable in Ghana (as per Article 11 of the 1992 Constitution), deeds derive their validity from their formality rather than bargained exchange. This is codified in aspects of the Contracts Act, 1960 (Act 25), Section 2, which recognizes formal contracts without mandating consideration.
• Practical Banking Implications: In Ghanaian banking, deeds are commonly used for mortgages or charges over property as security for loans, ensuring enforceability even if no fresh consideration is provided (e.g., a deed of assignment for debt restructuring). For instance, during the Domestic Debt Exchange Programmed (DDEP) from 2022-2024, banks like Stanbic Bank Ghana used deeds to formalize bond exchanges without needing new consideration, aiding post-DDEP recovery under BoG’s Liquidity Risk Management Guidelines. This exception protects banks in scenarios where customers might argue lack of consideration, such as in gratuitous guarantees formalized as deeds.
• Example: A bank executing a deed poll for a unilateral undertaking (e.g., to hold securities in safe custody) remains binding without reciprocal benefit, preventing disputes seen in historical cases like the collapse of UT Bank due to unenforceable informal agreements.

This exception highlights the importance of formal documentation in banking to mitigate risks, aligning with BoG’s Corporate Governance Directive 2018.

(ii) What is Consideration in Contract?

Consideration is the essential element that distinguishes a binding contract from a mere promise, representing the “price” or value exchanged between parties to support the agreement.

• Definition: In contract law, consideration is defined as something of value given by the Promisee to the promisor in exchange for the promise. It can take the form of a benefit to the promisor or a detriment to the Promisee. A classic definition comes from the English case Currie v Misa (1875) LR 10 Ex 153, adopted in Ghana: “A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.”
• Forms of Consideration: It may be executory (future promise, e.g., promise to pay a loan), executed (immediate act, e.g., payment of deposit), or in forbearance (refraining from action, e.g., not suing for debt).
• Practical Banking Implications: In Ghana, consideration underpins banker-customer contracts, such as account opening where the customer provides funds (consideration) for the bank’s services. Under the Payment Systems and Services Act, 2019 (Act 987), consideration ensures fintech transactions (e.g., mobile money transfers) are enforceable. For example, at Access Bank Ghana, loan agreements require clear consideration like interest payments, preventing void contracts during recapitalization efforts post-2019 cleanup. Lack of it could render overdraft facilities unenforceable, as seen in governance failures at Capital Bank.

Understanding consideration enables bankers to structure compliant agreements, enhancing profitability and ethical practices in line with BoG’s sustainable banking principles as of 2025.

(iii) Various Conditions for a Valid Consideration, Supported by Decided Cases

For consideration to be valid and enforceable, it must satisfy several conditions derived from common law principles applicable in Ghana. These ensure the bargain is genuine and legally sound, critical in banking to avoid disputes over loan recoveries or service agreements. Below, I outline the key conditions with supporting cases, including those influential in Ghanaian jurisprudence.

1. Consideration Must Be Real and Sufficient (Not Illusory): It must have some value in the eyes of the law, though not necessarily adequate. Illusory promises (e.g., “I will pay if I feel like it”) are invalid.
   • Case: Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87 – Wrappers from chocolate bars were held sufficient consideration for records, as they had promotional value, emphasizing that sufficiency is objective.
   • Banking Application: In Ghana, nominal consideration (e.g., GH¢1 peppercorn rent in leases as security) is valid for mortgages, aiding banks like GCB in property-backed lending under Basel III-adapted standards.
2. Consideration Must Move from the Promisee: The benefit or detriment must come from the party seeking to enforce the contract, not a third party.
   • Case: Tweddle v Atkinson (1861) 1 B&S 393 – A third party could not enforce a contract where consideration did not move from him.
   • Banking Application: In guarantees, the guarantor must provide consideration (e.g., forbearance from calling a loan), ensuring enforceability in tripartite banking arrangements, as per BoG’s risk management directives.
3. Consideration Must Be Lawful: It cannot involve illegal acts, immorality, or public policy violations.
   • Case: Pearce v Brooks (1866) LR 1 Ex 213 – Hiring a carriage for prostitution was unlawful consideration, voiding the contract.
   • Banking Application: Banks must ensure consideration in loans complies with anti-money laundering laws under Act 930; illegal consideration (e.g., funding illicit activities) led to collapses like Beige Bank during the 2017-2019 cleanup.
4. Consideration Need Not Be Adequate: The courts do not inquire into the fairness of the exchange if it has some value.
   • Case: Thomas v Thomas (1842) 2 QB 851 – A nominal rent of £1 per year was valid consideration for a house, as adequacy is irrelevant.
   • Banking Application: In debt settlements, banks accept reduced payments as full discharge (accord and satisfaction), practical in post-DDEP restructurings at Ecobank Ghana.
5. Past Consideration is Generally Not Valid: Consideration must be given in exchange for the promise, not before it (past is no consideration).
   • Case: Eastwood v Kenyon (1840) 11 Ad & El 438 – Past care for a ward was not consideration for a later promise to repay.
   • Exception (with Case): Bills of exchange or promissory notes, or where past act was at promisor’s request – Lampleigh v Braithwaite (1615) Hob 105.
   • Banking Application: In overdrafts, prior advances may not support new promises unless formalized; banks use Clayton’s Case (1816) for appropriation, ensuring current consideration in ongoing accounts.
6. Consideration Must Not Be a Pre-Existing Duty: Performing an existing legal or contractual duty is not new consideration.
   • Case: Stilk v Myrick (1809) 2 Camp 317 – Sailors’ promise to work extra without new pay was invalid, as it was existing duty.
   • Exception (with Case): Where extra benefit is provided – Hartley v Ponsonby (1857) 7 E&B 872.
   • Banking Application: Bank employees cannot demand extra pay for standard duties, aligning with governance under BoG’s 2018 Directive; in customer contexts, varying loan terms requires fresh consideration.

These conditions integrate into modern Ghanaian banking for resilience, as non-compliance risks void contracts, impacting profitability. For example, in digital banking trends as of 2025, ensuring valid consideration in app-based agreements prevents cyber risks under the Cyber and Information Security Directive 2020.