An Agreement without consideration is void.

" Explain this rule and state

exceptions if any. Unless
Indian Contract Act 1872 in section 2(e) says that every promise and every set of promises that form a consideration
for each other is an agreement. Thus, it is clear that the formation of consideration for a promise or promises is a key
ground on which a promise becomes an agreement. There cannot be an agreement if there is no consideration.
Section 25 of the act says the same thing in precise terms and also gives three exceptions when an agreement
without consideration is a valid contract:

Consideration
The term ‘consideration’ is used in the sense of “something in return”, i.e. quid pro quo. An agreement without
consideration is a bare promise and exnudo pacto non aritio actio, i.e., cannot be held to binding on the parties. Sir
Frederick Pollock has defined consideration, “It is the price for which the promise of the other is bought, and the
promise thus given for value is enforceable.”

In the case, Curie v. Misa the term was defined, “A valuable consideration in the sense of the law may consist either
in some right, interest, forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.”

It is well established in English law as well as in Indian Contract Act that consideration is essential for an enforceable
contract. It is an act or abstinence by the promisee or any other person, at the desire of the promisor. The
consideration maybe past, future or executory. As per the Indian Contract Act, 1872 the definition of consideration in
Section 2(d) states, consideration may be furnished by ‘the promisee or any other person’ as long as it is ‘at the
desire of promisor’[1]. Thus, the consideration may move from promisee, or some other person, if the promisor has
no objection, from any other person.There are certain cases where contracts without consideration are enforceable.

Section 25: An agreement without consideration is void unless,

1. it is in writing and registered and the promise has been made due to natural love and affection between the
parties standing in near relation to each other.
2. it is a promise to compensate, wholely or in part, a person who has voluntarily done something for the
promisor or something that the promisor was legally bound to do.
3. it is a promise to pay for a time barred debt.

(2) Agreement Made Without Consideration-

An agreement made without consideration is void, unless
1) it is expressed in writing and registered under the law for the time being enforce for the registration
of(documents), and is made on account of natural love and affection between parties standing in a near
relation to each other; or unless.
2) It is a promise to compensate, wholly or in part, a person who has already voluntarily done something
for the promisor, or something which the promissory was legally compellable to do, or unless.
3) It is a promise, made in writing and signed by the person to be charged therewith, or by his agent
generally or specially authorized in the behalf, to pay wholly or in part a debt of which the creditor might
have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract.

Explanation 1–Nothing in this section shall affect the validity, as between the donor and donee, of any gift
actually made.
Explanation 2- An agreement to which the consent of the promisor is freely given is not void merely
because the consideration may be taken into account by the court in determining the question whether the
consent of the promisor was freely given.

Illustrations
a) A promises for no consideration, to give to B Rs. 1000; this is a void agreement.
b) A, for natural, love and affection, promises to give his son, B Rs. 1000. A puts his promise to B into
writing and registers it. This is a contract.
c) A finds be B’s purse and gives it to him. B promises to give A Rs. 50. This is a contract.
d) A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a contract.

Thus, The exceptions to the Doctrine of Consideration as per

The Indian Contract Act are:

I. Natural love and Affection

A written and registered agreement which is based on natural love and affection between kins is
enforceable without consideration. In Rajkukhy Dabee v Bhootnath Mookerjee[2].

The defendant promised to pay his wife a fixed sum of money every month for her separate residence
and maintenance. The agreement was a registered document in which certain quarrels and
disagreement between the two were mentioned. The Calcutta High Court refused to regard the
agreement as one falling under this exception. The court could find no trace of affection between the
parties whose quarrels had compelled them to separate. In this exception, it is necessary that the
agreement is entered into with love and affection.

The decision of Bombay High Court in Bhiwav Shivaram[3], A sued B his brother for a share in
certain lands. But the suit was dismissed as B solemnly affirmed that the property was not ancestral
and agreed by registers writing to give A one-half of the same property. The present suit was born to
obtain that share. The plaintiff admitted that he and his brother had been on bad terms. But in spite
of the strained relations, the court held that this is just a case to which section 25(1) should be
applied. The defendant had such natural love and affection for his brother that in order to be
cancelled by him was willing to give him his property

II. Past voluntary service

A promise to pay for a past voluntary service is binding and such agreements don’t require an
exception. It is necessary that services are rendered voluntarily. For example, If A supports B’s infant
son and B promises to pay A’s expenses in so doing. This is a contract. Noting that B was legally
bound to support his infant son. As per this exception, the promise must be to compensate a person
who has himself done something for the promisor and not to a person who has done nothing for the
promisor.

Thus, where B treated A during his illness but refused to accept payment from A; being friendsA out
of gratitude promises to pay ₹ 1,000 to B’s son D, the agreement between A and D is void for want
of consideration as it is not covered under this exception.

III. Time-barred debt

A written promise to pay a debt barred by the Limitation Act is enforceable even without
consideration. The agreement must be signed by the promisor or by his agent or any other person
authorized by him.[4] For example, A owes B Rs 1,000. The debt is time-barred by the Limitation
Act. A signs a written promise to pay B the sum of Rs 1,000. This is a valid contract and no
consideration is required. A cheque issued for a time-barred debt falls under section 138 of the
Negotiable Instruments Act[5] in the view of Sec 25(3)[6].

IV. Completed gift

The gift presented by a donor and donee by the receiver will be a valid agreement even without
consideration. Thus, in the agreements made by way of gift, consideration is not necessary. In Vasant
Rajaram Narvekar v Ankusha Rajaram Narvekar[7] gift by mother to her minor son under gift deed
with the right to property up to her lifetime. The son kept it with his father and did not repudiate on
attaining majority. Thus, accepted and irrevocable.

V. Contract of agency

Section 185 specifically states that no consideration is necessary to create a contract of agency.
Thus, when a person is .appointed as an agent, his appointment agreement is valid without
consideration. An agent gets the commission as remuneration, but no consideration is necessary at
the time of appointment agreement is made.
Illustrations

1. A offers to sell his house to B for a sum of Rs. 50,000. B accepts the offer. In this
contract, for A’s promise, the consideration is a sum of Rs. 50,000 while for B’s promise
consideration is the house.
2. A, out of his love and affection, promises to give his wife, Rs. 10,000. This promise is put
into writing and is registered. It will be a valid contract without consideration.
3. A owes B Rs. 2,000 but the debt is barred by the Law of Limitation. A sign written
promise to pay B Rs. 1,000 on account of the debt. This is a valid contract without
consideration.
4. X treated Y during his illness and promised to pay Rs. 1,000 to Y’s son Z, the agreement
between X and Z is void for want of consideration as it is not covered under this
exception.
5. After persistent quarrels and disagreement between husband and his wife, the husband
promised in writing to pay his wife, a sum of money for her maintenance and separate
residence. The agreement was also registered. It was held that the promise was not
enforceable because it was not entered out of natural love and affection.

Exceptions to the Rule “No Consideration No Contract”

The general rule of law is that an agreement without consideration is void. “A bargain
without consideration is a contradiction in terms and cannot exist.”* But there are a few
exceptional cases where a contract, even though without consideration, is enforceable. They
are as follows:
1. An agreement made without consideration is valid if—
(a) it is expressed in writing, and
(b) it is registered (under the law for the time being in force for registration of
documents), and
(c) it is made on account of natural love and affection, and
(d) made between parties standing in a near relation to each other.
Examples
(1) An elder brother, on account of natural love and affection, promised to pay the debts
of his younger brother. The agreement was put to writing and was registered.
Held : The agreement was valid [Venkatswamy v. Rangaswamy (1903) 13 M.L.J. 428].
(2) A Mohammedan husband, by a registered agreement promised to pay his earnings
to his wife.
Held : The agreement, though without consideration, was valid [Poonoo Bibi v.
Fyaz Buksh (1874) Bom. L.R. 57].
Notice that for an agreement to be valid under this clause, the agreement must be the
result of natural love and affection and nearness of relation by itself does not necessarily
import natural love and affection.
Example
A Hindu husband by a registered document, after referring to quarrels and disagreements
between himself and his wife, promised to pay his wife a sum of money for her
maintenance and separate residence, it was held that the promise was unenforceable
[Raihikhy Dohee v. Bhootnath (1900) 4. C.W.N. 488].
2. A promise made without consideration is valid if, “it is a promise to compensate wholly
or in part, a person who has already voluntarily done something for the promisor, or
something which the promisor was legally compellable to do” [Section 25 (2)].
* Lord

Void Contract
A contract that has no legal force or binding effect.

Acceptable alternative way of describing a void contract:

 A contract that is nul.

 A contract which is legally no good.

Notes on this term:

Some examples of void contracts are:

 A contract which involves fraud in the execution.

 A contract in which the subject matter becomes illegal.

 A contract signed by a person under guardianship.

The subject of void contracts is studied in more depth in the chapters on capacity
and conduct which invalidates mutual assent.