Chapter 3 :Consideration

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Consideration Definition Section 2(d) of the Indian Contract Act 1872: When at the desire of the promisor the promisee or any other person 1)has done or abstained from doing, or 2)does or abstains from doing, or 3)promises to do or to abstain form doing something, such act or abstinence or promise is called a consideration for the promise. 4/14/12

Consideration may be

Act :: doing of something

Here Act

consideration is in affirmative form

should not be something which is a legal duty

An abstinence or forbearance
Here

consideration is in Negative Form

A return promise

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Legal Rules as to consideration

It must move at the desire of the promisor.

Ex. Saving goods from fire

It may move from the promisee or any other person. Consideration may be past, present or future

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Consideration may be an act, abstinence or forbearance or a return promise.

Forbearance to sue Compromise of a disputed claim Composition with creditors.

Consideration need not be adequate

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Consideration must be real and not illusory

Physical impossibility Legal impossibility Uncertain consideration Illusory consideration

Consideration must not be unlawful, illegal, immoral or opposed to public policy 4/14/12

STRANGER TO CONTRACT

Doctrine of privity of contract::

only parties to a contract may sue and be sued on that contract. relationship subsisting between the parties who have entered into contractual obligations

Privity to contract::

Two consequences of the doctrine of privity of contract::

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A person who is not a party to a contract

Exceptions

A trust or charge Marriage, settlement, partition or other family arrangements. Acknowledgement or estoppel.

Ex.Payment by agent.

Assignment of a contract Contract entered into through agent

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Covenants running with the land

Love and affection

A contract without consideration is voidEXCEPTION

Compensation for voluntary services Promise to pay a time barred debt. Completed gift Agency Charitable subscription where the promisee on the strength of the promise makes commitments.
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