Unit-2: Consideration

• Consideration


  Something done or abstained from doing, or a promise to do or abstain from doing, by the Promisee or any other person, at the desire of the Promisor
• Consideration

  • Must be something to which the law attaches value
  • Must not be unlawful, immoral, or opposed to public policy
• Consideration from the promisor

  An act done at the desire of a third party is not consideration
• Consideration from the promisee

  Consideration may proceed from the promisee or any other person who is a party to the contract
• Executed (Present) and Executory Consideration

  An act by one party may be the consideration for a promise by the other party, and vice versa
• Past Consideration

  The performance of an act by one party cannot be the consideration for a promise made by the other party at a later time
• Adequacy of Consideration


  Something given in return need not be equal in value to something given
• Performance of what one is legally bound to perform


  The performance of an act which a person is already legally bound to perform cannot be consideration for a contract
• Consideration must be real and competent
• Exception to the rule that a stranger to a contract cannot sue

  In the case of trust, family settlements, certain marriage contracts, assignment of contract benefits, acknowledgment/estoppel, covenants running with the land, and contracts entered into by an agent
• Natural Love & Affection[Section 25 (1)]

  A written and registered agreement made out of natural love and affection between parties who stand in a near relationship to each other is enforceable even without consideration
• Compensation for Past Voluntary Services[Section 25 (2)]


  A promise to pay for past voluntary services rendered to the promisor is enforceable without consideration, provided certain essential factors are met
• Promise to Pay Time-Barred Debt[Section 25(3)]

  A written promise to pay a time-barred debt, signed by the person making it or by their authorized agent, is valid without consideration
• Agency(section 185)


  No consideration is necessary to create an agency
• Completed Gift(section 25)


  In the case of completed gifts, the rule of no consideration does not apply
• Bailment(section 148)


  No consideration is required to affect a contract of bailment
• Charity

  If a person promises to contribute to a charity, the contract shall be valid without consideration
• Section 2 (d)


  defines Consideration
• Doctrine of Privity of Contract

  Even a stranger to a contract may enforce a claim in some exceptions
• An agreement made without consideration is said to be void (section 25)