Scotson had entered into a contract with a third party for the sale and delivery of coal. Under the contract Scotson agreed to deliver the coal to the third party or to anyone nominated by the third party. The third party sold the coal to Pegg and instructed Scotson to deliver the coal to Pegg. Scotson and Pegg then agreed, at Pegg's request, that Scotson would deliver the coal which was on board his ship to Pegg in return for Pegg agreeing to unload the coal at the rate of forty-nine tons of coal per day. Scotson delivered the coal but Pegg failed to unload the coal at the agreed rate which resulted in Scotson's ship being delayed for five days. Scotson sued Pegg for the losses he had incurred due to the delay.


  1. Was there consideration in the agreement between Scotson and Pegg?


Judgment for the plaintiff.


The court decided the case on the facts as though no previous contract between Scotson and the third party existed. On those facts, Pegg clearly received benefit from Scotson in the delivery of the coal and therefore was bound by the contract made between them.


Performance of an obligation to a party does not preclude that performance from serving as consideration to a different contract to a third party.