MAA VAISHNO DEVI EDUCATIONAL LAW

COLLEGE

Session - 2023-2024

CONSIDERATION

Subject - LAW OF CONTRACT

Roll No. - 10

Class - BALLB.HONS(FIRST SEMESTER)

Submitted To - Dr. Aryendu Dwivedi

Submitted By - ALOK TRIPATHI

Date Of Submission

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introduction

INTRODUCTION

Consideration is one of the most important essentials of a valid contract. In simplest terms
consideration is what a promisor demands as the price for his promise. Consideration is "which
for what"- something that a person givesfor

Section 2 (d) of the Indian contract act defines consideration as when at the desire of the
promisor, the promise or any other person has done or abstained from doing or does or abstrains
from doing or promises to do or to abstain from doing something, such act or abstinence or
promise is called a consideration for the promise."

In simple words the consideration is the price of the promise. The term is used in the sense of
quid-pro-quo i.e something that he receives in return.

In currie vs misa (1875) a consideration was defined as "a valuable consideration in the sense of
law may consist either in some right, interest, profit, or benefit accruing to one party, or some
forebearence, determinant, loss or responsibility given, suffered or undertaken by the other.

1. Com. Dig. Action on the Case. Assumpsit, B. 1-15

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ESSENTIAL PARTS OF THE CONSIDERATION

ESSENTIAL PARTS OF THE CONSIDERATION

The consideration is an act, or abstinence

Such act or abstinence should be done at the desire of the promisor.

Such act or abstinence may be done by the promisee or any other person.

Such act or abstinence is either already executed, or is in the process of execution or may be still
executory.

Consideration must move at the desire of the promisor: the act or forbearance must be done at the
desire of the promisor. If it is done at the instance of third party or without the desire of the
promisor, it is for a consideration. Act done at the desire of a third party is not a consideration.
Act must be done voluntarily at the desire of the promisor.

There should be a proposal for an acceptance to follow and then, when the other person does
something in consequence of such a proposal acceptance would be valid and such an act or
forbearance of doing or not doing something will be consideration.

Consideration may move from the promisee or any other person - Stranger to a contract: A
consideration may move from promisee or any other person. Consideration from a third party is a
valid consideration.

Consideration may move from the promisee or any other person-Stranger to a contract: A
consideration may move from promisee or any other person. Consideration from a third party is a
valid consideration
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ESSENTIAL PARTS OF THE CONSIDERATION

> Consideration may be past present or future: Law as to past consideration. Where the promise
has done or abstained from doing something, it is a case of a past consideration: In India, a past
consideration is sufficient to sustain a valid contract. If given at a request of a promisor it will
support a subsequent promise
Consideration need not be adequate: Consideration need not be adequate but must be of some
value in the eyes of law Court will not sit to decide the adequacy of consideration. Adequacy of
consideration is for the parties consider at the time of making the agreement and not for the Court
when it is sought to be enforced. However, there should be some value, because the law will not
enforce a promise given for nothing, except in cases provided under section 25 of the Act.

Consideration must be real and not illusory: Consideration must be real and of some value in the
eyes of law although it need not be adequate. Consideration is not real when it is uncertain
illusory or when it is physically or legally impossible to perform. It is sufficient if the
consideration is of slight value as long as it is not unreal and illusory.

Performance of exiting obligations is no consideration: The performance of an act by a person

who is already bound to perform the same either as a pubic duty or under the existing contractual
obligation cannot be consideration for a contract.

Forbearance is sue is a good consideration: Forbearance to sue or a promise to forbear, when

requested will support a promise by another. It is abstinence within the meaning of section 2(d).
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Some examples of consideration

Example: Ahmed agrees to sell his house to Omar for Rs.20,000,here. Omer’s promise to pay the
sum of Rs20,000 is the consideration for Ahmed’s promise to sell the house, and Ahmed’s
promise to sell the house is the consideration for Omer’s promise to pay Rs.20,000.

Example 2: A promises to maintain B’s child and B promises to pay A Rs. 1000 per month for the
purpose. Here the promises of each party is the consideration for the promise of the other party.

Kinds of Consideration:

1) Past consideration: where the promisor had received the consideration before the date of the
promise, the consideration is termed as "past consideration". It means a past act or forbearance.

Examples: a) A renders some services to B in the month of June. In July, B promises to pay A Rs.
100 the consideration of A is past consideration.

b) A teaches the son of B’s request in the month of January and in February B promises to pay A
Rs.200 for his services. The services of A will be past consideration.

2) Present consideration: where the promisor receives consideration along with his promise, the
consideration is termed as "present consideration". in other words, when the consideration and the
promise are simultaneous, it is called present consideration. Present consideration is also called "
executed consideration".

Example:
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Some examples of consideration
a) A agrees to sell his car to B for a sum of Rs.5000. B pays money to A at the time of making of
the contract consideration will be taken as "present" for A.
b) A receives Rs.200 in return for which he promises to deliver goods to B. The money A receives
is the present consideration for the promise he makes to deliver the goods.

3) Future consideration: This is also called "executory consideration" where the

promisor has to receive consideration in future for his promise, the consideration is said to be
"Future consideration" it is a promise for the promise. Mutual promises to marry, or promise to
work return of promise of payment are examples of future consideration.

Example: a) A promises to deliver car to B after a week. B promises to pay the price after a
month. The promise of A is supported by the promise of B. The consideration in this case is
future.

Exceptions:

There are, however, certain exceptions to the rule that past consideration is no consideration.
Under the exceptions, past consideration is as good as present or future consideration. The
exceptions are as follows:

1) Services rendered at the request of the promisor. When the consideration consists of services
rendered at the request of the promisor, it is a good consideration. The request may be either
express or implied.

2) Promise to pay a time-barred debt: where a debt is bound by limitation, the debtor can waive
the benefit of that plea and promise to discharge the debt. Such a promise is3) Negotiable
instrument: where a negotiable instruments is given in consideration of some past act, that past act
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Some examples of consideration
will form as a good consideration for the issue of the negotiable instrument and the party who gets
the instrument can validly enforce it.

4. Unreal Considerations: In the following cases, the consideration is not legal because of physical
or legal impossibility or uncertainty. The following are not real considerations.

1) Physical impossibility: If a person agrees to perform an impossible act for a consideration, the
promise is not enforceable. The promise is unreal. Discovering treasure by magic or making two
parallel straight lines meet or putting life back into a dead body cannot be enforced as promises
because of impossibility.

2) Legal impossibility: whenever the performance of a promise is legally impossible,

consideration is not real.

3) Uncertain consideration: Consideration is not real and is not enforceable if it is uncertain or

ambiguous. Examples: A engages B for doing a certain work and promises to pay a "reasonable
sum". There is no recognized method of ascertaining the "reasonable" remuneration. The promise
is not enforceable as it is uncertain.

4) Illusory consideration: An illusory consideration is not real and is unenforceable. Example: A

promises to give B one ton of gold brought from the sun, the consideration is sham and illusory.

5) Pre-existing legal obligations: A promise to do what one is already bound to do, either by
general law or under an existing contract, is not a good consideration for a new promise.
Similarly, a promise to perform a public duty by a public servant is not a consideration.
enforceable. A time-barred debt can be taken as valid consideration for a subsequent promise.
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real or good consideration

Real or Good Consideration:

The following are real or good considerations:

1) Forbearance to sue: forbearance to sue is a kind of abstinence. It means a person who has a
right of action against another person refrains from bringing the action. Forbearance to sue may
be forever or for a short or limited time. Forbearance to sue at the desire of the debtor is a good
consideration.

Example: A has a right to sue his debtor B for Rs.5000. But he postpones suing as B agreed to pay
Rs 2000 more. Such forbearance is a valuable consideration for the promise of B.

2) Compromise of a disputed claim: Compromise is a kind of forbearance. The compromise of a

disputed claim is a good consideration for the fresh agreement of compromise.

Example: A sues to recover a debt of Rs.2000 from B. B denies the whole debt and promises to
pay Rs.500 to A as a sort of compromise. This compromise of B is supported by consideration
and is valid.

3) Composition with Creditors: A person who is not in a position to pay his debts fully may call a
meeting of his creditors and request them to accept a lesser amount. If the creditors and request
them to accept a lesser amount. If the creditors agree to it, the agreement is binding upon the
debtor and creditors.
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"NO CONSIDERATION NO CONTRACT"

EXCEPTION TO THE RULE

General rule states that an agreement without consideration is void. Section 25 deals with the
exceptions to this rule. Where a contract even without consideration is enforceable. They are as
follows:

1. Natural love and Affection: see 25(1) of the Indian contract act, "An agreement without
consideration is void unless it is expressed in writing and registered under the law for the time
being in force of the registration of the documents and is made on account of natural love and
affection between parties standing in near relation to each other.

Example: Rajlukhy debee vs bhootnath (1990)

2. Voluntary compensation: A promise made without any consideration is valid, "if it is a promise
to compensate wholly or in part, a person who has already voluntary done something for the
promisor, or something which the promisor was legally compellable to do.

3. Agency: No consideration is required between the principal and the agent to create an agency.

4. Completed gift: Nothing in this section shall affect the validity as between the donor and the
done of nay gift actually made.

3. Rajlukhy debee vs bhootnath (1990): An agreement entered into by a husband with his wife
during quarrels and disagreement, whereby the husband agreed to give some property to his wife.
the agreement is void because under such circumstances ther is no natural love and effection
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between the parties.

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CONCLUSION

Consideration is the concept of legal value in connection with contracts. It is anything of value
promised to another when making a contract. It can take the form of money, physical objects,
services, promised actions, abstinence from a future action, and much more. Under the notion of
"pre-existing duties," if either the promisor or the promisee already had a legal obligation to
render such payment, it cannot be seen as consideration in the legal sense.

Although consideration is very important part of a contract and it is said that there exits no
contract without consideration but there are still certain exceptions to the law.

Consideration is the most important essentials of a valid contract but a contract does not becomes
void, in the absence of consideration.