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    Consideration

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    Prithvi Nath
    Consideration is a necessary element for a valid contract. [1] It refers to something of value that is exchanged between the parties, such as goods, services, or promises. [2] Consideration needs to involve a benefit to the promisor or detriment to the promisee. [3] For a contract to be enforceable, it requires consideration in the form of an act, abstinence from an act, or a return promise made voluntarily and at the request of the promisor.

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    Consideration

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    Prithvi Nath
    104 views3 pages
    Consideration is a necessary element for a valid contract. [1] It refers to something of value that is exchanged between the parties, such as goods, services, or promises. [2] Consideration needs to involve a benefit to the promisor or detriment to the promisee. [3] For a contract to be enforceable, it requires consideration in the form of an act, abstinence from an act, or a return promise made voluntarily and at the request of the promisor.

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    Consideration[law]

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    2. Consideration

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    Consideration is a necessary element for a valid contract. [1] It refers to something of value that is exchanged between the parties, such as goods, services, or promises. [2] Consideration needs to involve a benefit to the promisor or detriment to the promisee. [3] For a contract to be enforceable, it requires consideration in the form of an act, abstinence from an act, or a return promise made voluntarily and at the request of the promisor.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    104 views3 pages

    Consideration

    Uploaded by

    Prithvi Nath
    Consideration is a necessary element for a valid contract. [1] It refers to something of value that is exchanged between the parties, such as goods, services, or promises. [2] Consideration needs to involve a benefit to the promisor or detriment to the promisee. [3] For a contract to be enforceable, it requires consideration in the form of an act, abstinence from an act, or a return promise made voluntarily and at the request of the promisor.

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    of 3

    CONSIDERATION

    Consideration is an essential element of a valid contract. Consideration means something in return.


    It is the price agreed to be paid by promisee for the obligation of promisor.

    According to Pollock, “Consideration is the price for which the promise of the other is bought, and
    the promise thus given for value is enforceable.”

    According 2(d) has defined consideration as follows: “ When at the promisor, the promisee or any
    other person has done or abstained from doing, or does or abstains from doing, or promise to do or
    to abstain from doing, something, such act or abstinence or promise is called a consideration for the
    promise.”

    According Justice Patterson defines Considerations, “Consideration means something which is of


    some value in the eyes of law…… It may be some benefits to the plaintiff or some detriment to the
    defendant.”

    Consideration has the following components:

     An act ( doing something) or abstinence ( abstaining from doing something) forming


    consideration must move at the desire of promisor
     It may move from promise or any other person
     It may be past, present or future
     It must be something to which the law attaches a value

    No Consideration, No Contract:

     Any promise without consideration cannot lead to a valid contract since it will be a
    gratuitous promise
     Not only the object of a contract should be lawful, but the consideration therein should also
    be lawful

    ESSENTIALS OF VALID CONSIDERATION

    1. Consideration must move at the desire of the promisor: It is the first significant rule as to
    valid consideration that it must be offered by promisee at the request or desire of the
    promisor. Unless a person requests another person to do something how can he be made
    liable.
    Case law Durga Prasad Vs Baldeo 1881
    2. Consideration may move from promisee or any other person: Consideration may be
    supplied either by the promise or any other person (third).
    Case Law Chinnaya Vs. Ramayya 1882
    3. Consideration may be past, present and future:
     Past consideration: Past consideration is that consideration which has already been
    done for a present promise.
     Present consideration: When the consideration is given simultaneously by both the
    parties, it is called present promise. Eg. Cash sale
     Future consideration: The future consideration is executed in a future date.
    4. Consideration need not be adequate: Consideration need not necessarily be equal in value
    with something given. The law only insists on the presence of a consideration, it does not
    object upon inadequacy of consideration.
    5. Consideration must be real and not illusory: The consideration must be real, competent and
    of some value in the eyes of law. It must not be illegal, impossible or illusory. The
    consideration may not be real because of:
     Impossibility: Impossibility may be physical or legal.
     Legal impossibility: Illegal consideration means doing an act which is prohibited by
    law.
     Uncertainty: A promise to pay an uncertain amount is not a good consideration
     Illusory consideration
    6. Consideration must have something which the promisor is not already bound to do: It is
    because the performance of a pre-existing obligation is no consideration.
    However the following are good consideration:
     Forbearance to sue
     Compromise of disputed claims
    7. Consideration must be lawful: The consideration must be lawful. If the consideration is
    unlawful, the courts do not allow an action on the contract. The consideration is said to be
    unlawful if:
     If it is forbidden by law
     It is of such a nature, if permitted
     It is fraudulent

    EXCEPTIONS TO THE RULE, ‘NO CONSIDERATION, NO CONTRACT’

    Consideration being one of the essential elements of a valid contract, the general rule is that ‘an
    agreement made without consideration is void.’ But there are a few exceptions to the rule, where an
    agreement without consideration will be perfectly valid and binding. These exceptions are as
    follows:

    1. An Agreement made on account of natural love and affection: An agreement made without
    consideration is enforceability if, it is
     Expressed in writing
     Registered under the law for the time being in force for the registration of
    document
     Made on account of natural love and affection
     Between parties standing in a near relation to each other
    2. Agreement to compensate for past voluntary service sec 25(2): A promise to compensate,
    wholly or in part a person who has voluntarily done something for the promisor, or
    something which the promisor was legally compellable to do, is enforceable without
    consideration.
    This rule, in fact, recognises past consideration which was given without request or desire of
    the promisor.
    3. Written promise to pay a time-barred debt: A promise made in writing to pay a debt barred
    by the law of limitation is enforceable even without consideration.
    4. Gift, etc, actually made: Section 25 provides that any gift actually made is valid.
    5. To create agency: No consideration is necessary to create an agency.

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