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Essentials of A Valid Consideration

The document outlines the six essentials of a valid consideration in a legal contract: 1. The consideration must be given at the desire of the promisor. 2. The consideration can be given by either the promisee or another person. 3. The consideration can be in the past, present, or future. It explains the differences between past, present, and future consideration. 4. The consideration must be real, certain, and lawful. Unreal, uncertain, or illegal consideration results in a void contract. 5. Consideration can be either positive, involving an act, or negative, involving an abstinence or forbearance of an act. 6.

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2K views4 pages

Essentials of A Valid Consideration

The document outlines the six essentials of a valid consideration in a legal contract: 1. The consideration must be given at the desire of the promisor. 2. The consideration can be given by either the promisee or another person. 3. The consideration can be in the past, present, or future. It explains the differences between past, present, and future consideration. 4. The consideration must be real, certain, and lawful. Unreal, uncertain, or illegal consideration results in a void contract. 5. Consideration can be either positive, involving an act, or negative, involving an abstinence or forbearance of an act. 6.

Uploaded by

Ayush sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Essentials of a Valid Consideration

The essentials of a valid consideration are derived from the definition


of ‘consideration’ given under section 2(d) of the Indian Contract Act,
1872. They are:-

1. Give at the desire of the promisor.


2. Given by the promisee or any other person.
3. It may be in the past, present or future.
4. It must be real, certain and lawful.
5. It may be positive or negative.
6. It need not be adequate.

The six essentials of a valid consideration are explained below in detail.

1. Given at the Desire of the Promisor.

The consideration should be given at the desire of the promisor, not


that of the third person. The act done at the plaintiff’s desire may be of
no significance or personal benefit to the plaintiff – it will be considered
a good consideration.

In Durga Prasad vs Baldeo 1880, the defendant spent some money on


construction at the desire of the district’s collector. Plaintiff promised to
pay commission to the defendant on articles sold by him in the market
in which he occupied a shop.
In a suit by the defendant, it was held that there was no consideration
for the promise made by the plaintiff and hence no contract as he had
not constructed that market at the plaintiff’s instance.

2. Given by the Promisee or Any Other Person.

The consideration doesn’t need to be given by the promisee. It may


come from any other person also. It is immaterial as to who furnished
it.

In Chinnaya vs Ramayya, an old lady gifted her entire property to her


daughter under the condition that she would give annuity to her uncle.
Annuity means paying someone a fixed sum of money each year,
typically for the rest of their life. She agreed to pay annuity but stopped
after some time and filed a plea that no consideration was moved by
her uncle. The court rejected the plea and held that indirect
consideration was already moved by her aunt.

3. Consideration May Be Past, Present or Future.

The past, present, and future nature of the consideration can be


inferred from the definition of ‘consideration’ as given under section
2(d) of the Indian Contract Act.

A consideration is called past consideration when the act is done


before any promise is made. Example: A renders his service to B,
and B promises to pay a sum of ₹500 for the service after a month. This
is past consideration.
When consideration is given simultaneously with the promise is
called present consideration. It is also known as executed
consideration. Example: Sale of an article in cash.

When a promise is made to do or abstain from doing something in


future, it is called future consideration. It is also known as executory
consideration. It is a promise for a promise. Example: A agrees to
sell B 10 quintals of wheat at ₹10000 when they will be harvested.

4. It Must Be Real, Certain and Lawful.

In a contract where consideration is unreal, uncertain or unlawful, such


contract is void.

If A agrees to sell his car to B at whatever price he wants to pay is an


uncertain consideration.

If B promises to pay ₹10000 to A to beat up C, it is an illegal


consideration.

5. Consideration May Be Positive or Negative.

There should be some act or abstinence. Consideration may be positive


when the promisee does something at the express wish of the
promisor. Consideration may be negative when the promisee is
abstained from doing something at the wish of the promisor.

6. It Need Not Be Adequate.


Consideration need not necessarily be adequate. The law provides that
there should be a consideration for a valid contract. It may or may not
be adequate. The adequacy of consideration is for the parties to
consider at the time of agreement. A contract cannot be held invalid on
the grounds of the inadequacy of consideration. For instance, A decides
to sell his wheat produce valued at ₹10000 for ₹2000 to B. Such
agreement will be deemed to be a contract if A has free consent.

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