Sunday, 7 August 2011

Define consideration and explain its main essentials and exception or Discuss the legal position of consideration or No consideration no contract is valid

It is defined in the following words : "When at the desire of the promiser the promisee has done or abstained from doing or does or abstains from doing such act is called a consideration for the promise."

In other words "Consideration is a reward accepted or given in return for the promise. it is a fact that without consideration agreement is not valid."


1. By Promisee :-
Consideration by the promisee or any other person.

2. Desire of the Promisor :-
It should be given at the desire of the promisor.

Example 1 :- Mr. Shah agrees to sell his "house for Rs. Twenty lac to Mr. Amit. Now Mr. Amit promises to pay the such amount is the consideration for Mr. Shah's promise.

Example 2 :- Mr. Donalnd a promisor agrees with Mr. Kim that if he will abstain himself from filling a suit then he ( Mr. Donald ) will pay him Rs. Ten thousand. In this situation Mr. Kim abstained from filling suit is a consideration for Mr. Donald.

3. Consideration May Be Past, Present or Future :-
Consideration is an act which has already been done or in progress or to be done in future at the desire of the promisor.

i. Past Example :- Mr. Nash lost his car and Mr. Frank a finder delivers it to him. Mr. Frank can not demand payment of his services due to the past consideration.

ii. Present Example :- Mr. Ali sells a house to Miss Sana. She pays its price immediately. It is called present consideration.

iii. Future Example :- Mr. Shah promises to deliver a shop to Mr. Khan after a one month for Rs. 1 lac upon the promise of Mr. Khan to pay the agreed price at the time of delivery. It is called future consideration.

4. Must be Real :-
Consideration must be realistic and competent. If consideration is physically impossible, illegal and uncertain it will be not valid.

5. Needs Not To Be Adequate :-
The law only insists on the presence of consideration and not on its adequacy. Inadequacy may create the doubt about the free consent of two parties but it is valid if free consent is proved.

Example :- Mr. Kullo agrees to sell his house for Rs. 25 lac. If the consent of Mr. Kullo is free then agreement is valid contract, without consideration.

6. Lawful Consideration :-
Consideration should be unlawful because it can not form a valid contract. It should not be against the public policy.

No doubt without consideration agreement is void but it has also exceptions which are following:

1. Case of Love :-
Consideration is not compulsory if an agreement made between the parties for natural love and affection.

2. Case of An Agent :-
The contract of agency requires consideration, where the contract is a promise to appoint an agent.

3. Case of Voluntary Services :-
In case of compensation for voluntary services there is a relaxation of consideration.

4. Case of Donation :-
Agreement made for donation is not enforceable for want of consideration. A promised amount can not be legally recovered where the promisee has done nothing on the basis of promise.

Example :- If Mr. Shah promised to donate one lac for the repair of college.College principal did nothing for repair. Mr. Shah refused to pay. On a suit by principal it was held the Mr. Shah is not liable because it did not result any loss to promisee.

5. Case of Gift :-
In case of gift there is no need of any consideration. According the law any gift which is actually delivered will be valid. It cannot be demanded back on the ground that there was no consideration for him.

6. Extension in Time Limit :-
There is no need of any consideration if agreement is made to extend time for the enforcement of the contract.

Example :- Mr. Chun agrees to construct the shop for Mr. Raju within one year against Rs. 20 lac. Later on the request to Mr. Raju to extend the time period for the completion of the shop. Mr. Raju accepts the request. It is a valid agreement without consideration.

7. Case of Time Barred Debt :-
If a debtor promises to pay a time barred debt, then there is no need of consideration. The promise must be in written and signed by the debtor or his agent.

8. Contract Under Seal :-
A contract without consideration is valid if it is made under seal.

Example :- Mr. Nehra and Mr. Adit enter into agreement by writing the partnership deed to form a partnership. This contract is valid.


Anonymous,  15 November 2015 at 21:46  

pl change d color its not clearly visible.

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