Definition and Essentials of Consideration in Contract Act LLB Notes

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Definition and Essentials of Consideration in Contract Act


Consideration is the foundation of every contract. The law enforces only those promises which are made for consideration. Where one party promises to do something, it must get something in return. This 'something in return' is called consideration. Consideration is the very life-blood of every contract. In the absence of consideration  or undertaking is purely gratutious. However, sacred and binding in honor, it is create no legal obligation.


Definition.

 Consideration has been defined in many ways.
According to pollock
"Consideration is the price for which the promise of some other is brought and the promise thus given for value is enforceable."

It is something which is of some value in the eyes of law.
According to Section 2 (d) of the Contract Act defines consideration as-
(a) when at the desire of the promisor,
(b) the promise or any other person,
(c) has done or abstained from doing, or does or abstain from doing, or promises to do or abstain from doing,
(d) something, such act or abstinence or promise is called a consideration for the promise.

Example:

A agrees to dell his horse to B for Rs. 1000. Here A's promise to sell his horse is for B's consideration to pay Rs. 1000 is A's consideration to sell his horse to B.





Essentials of Valid Consideration


The essentials or legal rules of a valid consideration are as under:-

1. It must move at the desire of the promisor:

In order to constitute legal consideration the act or abstinence forming the consideration for the promise must be done at the desire or request of the promisor.

Example:

A saves B’s house from the fire without being asked to do so. A cannot demand payment for his services because A performed this act voluntarily and not at the desire of B.

2. It may move from the Promisee or any other person:

The second essential of a valid consideration is that consideration may move from the promisee or from a third person on his behalf. In other words the act which is to constitute consideration may be done by the promise or any other person.

Example:

A, an old lady, gifted her property to her daughter R on the condition that she should pay certain amount annually to A’s brother C. On the same day R, entered into an agreement with her Uncle C to pay the amount. Afterwards she refused to fulfill her promise. C filed a suit. It was held that C was entitled to recover the amo0unt as the consideration on his behalf had moved from her sister A.


3. It may be past, present or future:

It is clear from the definition of consideration that it may be past present or future. It means that the consideration is an act, which has already been done at the desire of the promisor, or in progress or is promised to be done in future.

A) Past Consideration:

When the consideration for a present promise was given before the date of the promise it is called a past consideration. It is not a valid consideration.

Example:

1. A has lot his pure and B a finder, delivers it to him. B cannot demand payment for his services because of past consideration.
2. A teaches the son of B at B’s request in the month of January and in February B promises to pay A sum of Rs.2,000 for his services. The services of A will be past consideration.

B) Present Consideration:

When consideration is given simultaneously by one party to another at the time of contract, it is called Present Consideration. The act constituting the consideration is wholly or completely performed.

Example:

A sells a book to B and B pay its price immediately it is a case of present consideration.

C) Future Consideration:

When the consideration on both sides is to be given at a future date, it s called future consideration or executory consideration. It consists of promises and each promise is a consideration for the other.

Example:

X promises to deliver certain goods to Y for Rs.1500 after a week upon Y’s promise to pay the agreed price at the time of delivery. The promise of X is supported by promise of Y and the consideration is executory on both sides.


4. It need not be Adequate:

It is not necessary that consideration should be adequate to the value of the promise. The law only insists on the presence of consideration and not on its adequacy. It is for the parties to the contract to consider the adequacy of consideration and the courts are not concerned about it.

Example:

A agrees to sell his car worth Rs.200,000 for Rs.50,000 only and his consent is free. The agreement is valid contract.

5. It must be Real:

It is necessary that consideration must be real and competent. Where consideration is physically impossible illegal uncertain or unreal it is not real and therefore shall not be a valid consideration.

A) Physically Impossible:

A promise to do something which is physically impossible.

Example:

A, promise to put life in B’s dead brother on B’s promise to pay him Rs.1 Lac.

B) Legally Impossible:

A promise to do something which is illegal.

Example:

A promise to pay Rs.1 Lac to B on his promise to beat C.

C) Uncertain Consideration:

A promise to do something, which is too unclear and uncertain.

Example:

A employs B for a certain work and B promises to pay A.



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