The elements of a valid contract are agreement, intention, and consideration. Consideration must be something of value which passes from one party to the other, and it merely needs to be sufficient, but does not need to be adequate. Hence, it is common to provide token consideration e.g. a peppercorn or £1.
I've recently come across a contract which states along the following lines:
In consideration of £1 which Party A shall pay to Party B and £1 which Party B shall pay to Party A, the parties agree [...]
This has lead to a debate about what constitutes valid consideration. My instinct tells me that this is not sufficient consideration, as the reality is that nothing of value passes between the parties. Party A pays £1 to Party B who pays it right back, and neither party have gained anything. Indeed, the person who drafted this clause has advised the parties that they do not need to actually transfer any money since one offsets the other.
Is anyone aware of any precedent (preferably in E&W but other jurisdictions are fine) which deals specifically with the case where the purported consideration of the parties are identical and cancel each other out?