Professional Documents
Culture Documents
Consideration - An Essential Element of A Contract
Consideration - An Essential Element of A Contract
The Indian Contract Act, 1872, Section 2(d) defines consideration as follows:
‘When at the desire of the promisor, the promisee or any other person has done or
abstained from doing, or does or abstains from doing or promises to do or abstain
from doing something, such an act or abstinence or promise is called consideration
for the promise.’
In the English case law of Currie vs. Misa ‘consideration’ was explained as:
“A valuable consideration in the sense of the law may consist either in some right,
interest and profit or benefit accruing to one party for some forbearance, detriment,
loss or responsibility given, suffered or undertaken by the other.”
EXAMPLE:
A promises to maintain B’s child, and B promises to pay RS.1000 yearly for the
purpose. Here, the promise of each party is the consideration for the promise of the
other party.
Judgment – The court held that the promise to pay commission was not
supported by consideration as the shops were not built at the desire of
shopkeepers but at the desire of the collector.
Facts –
The words used in the definition under section 2(d) of the Indian Contract
Act, clearly state that consideration may be past, present or future.
6. It must be Lawful
Whether consideration is adequate or not is the job of the parties to decide. They
can decide it at the time of making the agreement. However, it must have some
value in the eyes of law. An agreement to which the consent of the promisor is
freely given is not void merely because the consideration is inadequate. In other
words, if the consideration is inadequate, the consent of the promisor must be
freely given to make such agreement enforceable by law.
Contract of agency.
If a person is appointed as an agent, his appointment is valid even without
consideration.
1. If it is forbidden by law-
If the consideration or the object of a contract were forbidden by law, it
would be unlawful and hence unenforceable.
3. If it is fraudulent
An agreement, whose object or consideration is to defraud others, is
unlawful and hence void.
Example –
a. An agreement to kill someone for Rs. 5, 00, 000 is illegal and hence void.
b. An agreement which compels a debtor to do manual labour for the
creditor as long as the debt is not repaid in full is void.
Example –
A had lent money to B to obtain a divorce from her husband C. It was agreed one
B obtains the divorce A would marry her. But the courts held A cannot recover
money from B since the contract is void on account of unlawful consideration.