CONSIDERATION

• According to Section 2(d)

Consideration is defined as: "When at the
desire of the promisor, the promisee has done
or abstained from doing, or does or abstains
from doing, or promises to do or abstain
something, such an act or abstinence or
promise is called consideration for the
promise
 ESSENTIALS
1. At the desire of the promisor;(Promissory
Estoppel)
 An act shall not be a good consideration for a
promise unless it is done at the desire of the
promisor -----Durga Prasad Vs. Baldeo
 Acts done at the request of the promisor’s
desire furnishes a good consideration --
Kedar Nath Vs. Gorie Mohamed ;
• Promises of Charitable nature becomes
enforceable ---
Dist. Board of Ramnad Vs. Mohd. Ibrahim;
Doraswami Iyer Vs.Arunachala Ayyar;
Abdul Aziz Vs. Mazoom Ali ( Not applicable in
case of unilateral promise i.e in the absence of
promisee’s promise)
• A unilateral contract cannot be revoked once
the other party entered on performance of
the act, but the contract would cease to be
binding if the party left it ----
Errington Vs. Errington
 Doctrine of Promissory Estoppel:

• Promissory estoppel is derived from equity: – It is one of several

kinds of estoppel all of which can be said to be “mechanisms for
enforcing consistency”

• Promissory estoppel basically prevents a party to a contract

from acting in a certain way because they promised not to act
in that way, and the other party to the contract relied on that
promise and acted upon it.

• Promissory estoppel occurs when there is a contractual

relationship between parties. Like when there is a legal
relationship between the promisee and the promisor
• Requirements of promissory estoppel (1) 1) There
is a pre-existing contractual relationship. 2) One
party to that contract makes a clear promise that
they will not fully enforce their legal rights (under
that contract). 3) The promisor intends that
promise be relied upon and promisee does in fact
rely upon it. 4) It would be inequitable for
promisor to go back on (resile from) their
promise. • Re (2), promise need not be express; it
can be implied from circumstnaces (situation in
Hughes).
• Requirements of promissory estoppel (2) • Re (3), it would seem that
promisee’s reliance need not be detrimental in the sense that, if the
promise were revoked, the promisee would be worse off than if promise
had never been made. – It is sufficient that promisee has altered their
position in reliance upon promise so that they would be prejudiced if
promisor resiled from promise. “The nub is the promisee’s inability to
resume his original position due to the reliance. The corollary is that if he
can resume his original position, or can do so on reasonable notice (as in
High Trees), there is no inequity in resiling from the promise either
completely or for the future, as the case may be”. (M. Chen-Wishart,
Contract Law, OUP, 2006, p. 175. • Re (4), this overlaps with (3) but mere
fact of reliance will not necessarily mean that inequity requirement is met.
– Inequity = separate and independent requirement. Whether inequity
would result, depends on assessment of all circumstances of case at hand.
If promisee extracts promise through extortion and/or deception, then (4)
would not be met. See e.g. D & C Builders v. Rees (1966)
• Effect of promissory estoppel on promisee’s position (1) •
While promisee need not provide any consideration for
promisor’s promise, they cannot sue on promise (they have
not provided consideration for it). In other words, doctrine
cannot be used as cause of action in itself; it does not
confer or create new rights on promisee; it only operates to
stop promisor from fully enforcing previous rights against
promisee (i.e. doctrine operates as “shield but not as
sword”). • Concomitantly, doctrine can only be used where
there is preexisting contractual relationship (or other
relationship creating legal rights), for which consideration
will have been required. It cannot be used where one party
promises to do more than what contract requires or to pay
more than required.
• Effect or promissory estoppel on promisor’s legal rights • It
suspends but does not fully extinguish the promisor’s strict
legal rights. – Tool Metal Manufacturing Co. Ltd. v. Tungsten
Electric Co. Ltd. (1955); operation of rights may be resumed
once reasonable notice given of intention to resume their
operation and if promisee can resume their original
position (Emmanuel Ayodei Ajayi v. RT Briscoe Ltd. (1964)).
If latter condition cannot be met, effect of doctrine is to
extinguish rights. • Some terminological debate here: –
Denning says the rights are extinguished even during the
time they are suspended because, in reality, they cannot be
claimed back for that period (even if they can be revived
later).
• Relationship of promissory estoppel to Pinnel and Roffey •
Relationship is complex and murky. • Rule in Pinnel’s Case remains
point of departure for promises to accept less. Promissory estoppel
may come in to modify impact of Pinnel if all conditions for applying
it are present. Estoppel does not necessarily destroy primary
obligation (to repay debt). • Note recent decision of CA in Collier v.
P & M J Wright (Holdings) Ltd. (2008) 1 WRL 643: One judge (Arden
LJ) prepared to use promissory estoppel to override the effect of
Pinnel’s Case, but authority is weak. • Estoppel not yet applied to
promises to pay more. Roffey court did not consider promissory
estoppel (!) • Note somewhat uncertain status of promissory
estoppel: Supreme Court (formerly HL) has yet to confirm existence
of doctrine. But extremely doubtful it would not do so.
• Promissory Estoppel as against and its
agencies Government Agencies –
UOI Vs. Indo Afghan Agencies
Pournami Oil Mills Vs. State of Kerala;
Amrit Banaspati Co Vs.State of Punjab;
• 2. Promisee or any other person (Privity of
consideration):
Duttton Vs. Poole;
Tweddle Vs. Atkinson;(The Court of Queens
Bench overruled it’s earlier decision);
Chinnayya Vs. Ramayya
• 3. consideration may be past, present or future:
• (a) Past consideration – “If the act has been done
before any promise is made”.
 According to English law past act at the request of
the promisor is good consideration—Lampliegh
Vs. Brathwait
 In Indian law past consideration is a good
consideration ---Sindha Shri Ganapath Singh Vs.
Abraham;
• (b)Present Consideration -----”When the
consideration for a promise is given
simultaneously with the promise”.
• (c) Future consideration – “It is a promise to
do or give something in return in future for
the promise”.
• 4. Consideration must be of some value and --
--
• White Vs. Bluett;
• Kulasekara Perumal Vs. Patakutty ;
• Need not be adequate :
• De La Bere Vs. Pearson;
• A.Lakshmana Swamy Mudaliar Vs. LIC
• 5.consideration must be real and unlawful:
 Forbearance to sue is a good consideration ---
Indira Bai Vs.Markand;
6.Consideration must be something which the
promisor is not already bound to do:
“Performance of a legal duty is no consideration for
a promise”;
“ A Promise to perform an existing duty is sufficient
consideration to support a promise, so long as
there is nothing in the transaction which is
contrary to the public interest”
“Performance of a legal duty is no consideration
for a promise”--
Collins Vs. Godfrey;
R.Sashannah Chetti Vs. Ramaswami chetti;
Exceptions:
1. Services rendered out side the scope of
official obligations –
Glassbrook Brothers Ltd Vs. Glamorgan County
Council.
2. Legal obligations imposed by a contract –
Ramchandra Chintaman Vs. KaluRaju
• Privity of Contract or Doctrine of Privity:
Dunlop Pneumatic Tyre co Vs. Selfridge & Co;
Jamna Das Vs. Ram Autar;
Beswick Vs. Beswick;
• Exceptions:
1.Beneficieries of the contact i.e, under Trust
or Charge or other Arrangements;
Rana Umanath Baksh Singh Vs.Jang Bahadur;
Gregory & Parker Vs. Williams;
Touche Vs.Metropolitan Rly.Warhousing Co;
Chacko Vs.State Bank of Travancore;
• 2. Marriage Settlement, Partition & other
Family Arrangements:
• Khwaja Muhammad Khan Vs. Hussaini Begum;
• Rose Fernandez Vs. Joseph Gonslaves;
• Shappu Ammal Vs. Subramaniyam
• 3. Acknowledgement or Estoppel:
• Devraja Vs. Ram Krishnaiah;
• Kshirodebehari datta Vs. Mangobinda Panda;
• Panatown Ltd Vs. Alfred
Mc.AlpineConstruction Ltd
• 4. Covenants running with land:
• Tulk Vs. Moxhay;
• Smith & Snipes Hall Farm Ltd Vs. River Douglas
Catchment Board
 NUDUM PACTUM
• Ex-nudo Pactum non oritur actio i.e, out of a
naked pact, no cause of action can arise.
• An agreement without consideration is void.
• A promise in order to be enforceable must
have consideration, because only a
consideration can establish legal obligation
and create legal rights between the parties.
• Sec.25– An agreement made without
consideration is void unless-
• (1) It is in writing and registered; or
• (2) Is a promise to compensate for something
done; or
• (3) is a promise to pay a debt barred by limitation
law;
• Expl.I—Gift;
• Expl-II ---- Inadequacy of consideration
 Exceptions
• 1. Natural love and affection;
Raj lukhy Dabee Vs. Bhoothnath Mookerjee;
Bhiwa Vs. Shivaram ;
Manali Singhal Vs. Ravi Singhal
• 2. Past voluntary service;
Sindha Shri Ganapath Singh Vs. Abraham;
• 3.Time-barred debt:
R.Suresh Chandra & Co Vs. Vadnese Chemical
Works;
Ramkrishnan Vs. Gangadharan Nair
4.Gift
• 5. Agency;
• 6.Remission: