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Consideration - Final-PPT

The document outlines the concept of consideration as defined by Section 2(d) of the Indian Contract Act, emphasizing that it is the exchange of something of value between parties in a contract. It details the essentials of valid consideration, including its requirement to move at the desire of the promisor, its lawful nature, and the conditions under which it can be past, present, or future. Additionally, it discusses exceptions where a stranger to a contract can sue and situations where consideration is not necessary for a contract to be enforceable.

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8 views12 pages

Consideration - Final-PPT

The document outlines the concept of consideration as defined by Section 2(d) of the Indian Contract Act, emphasizing that it is the exchange of something of value between parties in a contract. It details the essentials of valid consideration, including its requirement to move at the desire of the promisor, its lawful nature, and the conditions under which it can be past, present, or future. Additionally, it discusses exceptions where a stranger to a contract can sue and situations where consideration is not necessary for a contract to be enforceable.

Uploaded by

ishubhardwaj7982
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CONSIDERATION

- Ms Namita
Aggarwal
Asst. Professor
CONSIDERATION (As Per Act)

Section 2(d) of the Indian Contract Act defines Consideration as :


a) when at the desire of the promisor,
b) the promisee or any other person,
c) has done or abstained from doing, or does or abstains from
doing, or promises to do or abstain from doing,
d) something, such act or abstinence or promise is called
consideration for the promise.
MEANING

✔It is ‘quid pro quo’ i.e. something in return.


✔It is the price of promise

Consideration May be :
An act - means doing of something.
An abstinence – promising not to do something .
A promise – the promise of each party is the consideration for each other

⮚ Example
⮚ X agrees to sell his TV set to Y for rs.8000. TV set is the consideration of Y
and rs. 8000 is the consideration of X.
ESSENTIALS OF VALID CONSIDERATION
1.Must move at the desire of the promisor – X’s house catches fire, and
Y helps in extinguishing it without being requested to do so by X. Y
cannot demand any payment for his voluntary service.

2.It must move from promisee or any other person – For making a valid
contract consideration must be there, it is immaterial who furnishes it

A stranger to consideration can sue, provided he is a party to contract…


ESSENTIALS OF VALID CONSIDERATION
3.It may be past, present or future :

Past consideration : When the consideration for a present promise was given
before the date of promise, it is said to be past consideration.
Award in cash for saving the house from fire

Present consideration : When the consideration for a promise is given


simultaneously with the promise it is called present consideration.
Cash sales

Future consideration : A future or executory consideration is a promise to do


or give something in return in future for the promise then made.

X promises to deliver 100 quintals of rice to Y after a month and Y promises to


make the payment a month after delivery of rice.
ESSENTIALS OF VALID CONSIDERATION
4. It need not be adequate : Inadequacy of the consideration is no ground for
refusing the performance of the promise, unless it is evidence of proof.
Selling a car for just Rs. 5000

5. Consideration must be real : Consideration must be real and not illusory. It


must be competent. If it is
• physically impossible, (making a dead person alive)
• vague or legally impossible
ESSENTIALS OF VALID CONSIDERATION
6.Consideration must be lawful : An agreement is void if it is based on
unlawful object. An agreement is considered unlawful if :
a) it is forbidden by law
b) is of a nature that if permitted it would defeat the provisions of
any law
c) is fraudulent
d) involves or implies injury to the person or property of another
e) the court regards it as immoral or opposed to public property
Example: smuggling, murder

7.It must be something which the promisor is not already bound to do


Where a person who by his official status or by operation of law is under a public
duty to act, the discharging of that duty cannot be regarded as consideration.
EXCEPTIONS (Stranger to Contract Can Sue)
1. Trust : In case of trust, the beneficiary may enforce the contract even though
he is stranger to the contract creating trust.

2. When provision is made in a marriage settlement. : Where an agreement is


made in connection with marriage and a provision is made for the benefit of a
person he may take advantage of that agreement although he is not a party to
it.

3. When provision is made in a partition or family settlement


EXCEPTIONS (Stranger to Contract Can Sue)
4. Where a promisor has by his conduct created privity of contract with the
stranger : If ‘A’ admits to ‘C’ that he had received money from ‘B’ for the payment to
‘C’ , he constitutes himself as the agent of ‘C’ who can successfully recover the
amount from ‘A’.

5. Contract entered into by an agent can be enforced by the principal : The


principal can enforce the contract entered by his agent where the agent has acted
within the scope of his authority and in name of the principal.
EXCEPTIONS (No Consideration No
Contract )
1. Natural love and affection : A written or registered agreement based on
natural love and affection between the parties standing in near relation to each
other is enforceable even without consideration.

2. Compensation for services rendered : In order that a promise to pay for the
past voluntary services be binding, the following essentials must exist
a) the act must be done voluntarily
b) for the promisor or it must be something which was the legal obligation
of the promisor
c) the promisor must be in the existence at the time when the act was
done
d) the promisor must agree now to compensate the promise

3. Time barred debt : Where a promise in writing signed by the person making it
or by his authorized agent, is made to pay a debt barred by the limitation it is
valid without consideration
EXCEPTIONS (No Consideration No
Contract )
4. Completed gifts: In this case the rule “No consideration, No contract” shall not
affect the validity as between the donor and the donee, of any gift actually
made. Thus gifts do not require consideration.

5. Agency: According to section 185 of the Indian Contract Act, no consideration


is required to create an agency.
Thank You

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