Lawful

Consideration

Ajantha Balu
Wednesday, December 08,
09-BBA-FR-005 1
2021
All agreements are contracts only if they are
made by the free consent of parties
competent to contract, for a LAWFUL
CONSIDERATION and with a lawful object,
and are not hereby expressly declared to be
void.

2
 “An act or forbearance of one
party, or the promise thereof, is the price for
which the promise of the other is bought, and
the promise thus given for value is
enforceable.”
- Sir Frederick Pollock

It is the value set for the promise.

Consideration
3
•Quid pro quo- Something in return
•“Something of value in the eyes of law”
•The Consideration is modified in a existing contract
only when a new promise is made between the
parties.

What is Lawful
consideration? 4
 Consideration

Executed Executory
Consideration Consideration

5
 Executed
Consideration

Promise Act
Advertisement
Advertisement inin the
the daily
daily Post:
Post: ‘$50
‘$50 reward
reward will Michel
be paid for the return of my Black and
will
White
Michel finds
finds Meg
Meg and
and returns
returns her
her to
to
be paid for the return of my Black and White John, having seen the advertisement.
English
English Springer
Springer Spaniel,
Spaniel, Meg.
Meg. Please
Please ring
ring John,
John, John, having seen the advertisement.
687 687 6876’
687 687 6876’ Michel
Michel successfully
successfully claims
claims the
the reward.
reward.
6
 Executory
Consideration
Promise Promise
Ramesh
Ramesh promises
promises to
to pay
pay $1200
$1200 when
when Suresh Ltd promises to deliver
a
a new
new fax
fax machine
machine is
is delivered.
delivered. the machine in one month.

7
1.It need not be adequate
2.It should move at the desire of the
promisor.
3. It may move from the promisee or any
other person.
4. It may be an act or Forbearance to sue
5. It may be past, present or future.
6. It must not be illegal or immoral

Legal rules relating to

Consideration
8
 Providing consideration has some value,
the courts will not investigate its adequacy. Where
consideration is recognized by the law as having some
value, it is described as "real" or "sufficient" consideration.
The courts will not investigate contracts to see if the
parties have got equal value. 
The something in return need not be equal
in value to something given.

1.It need not be adequate

9
A consideration should have been done at
the desire or request of the promisor.
If it is done by a third party without the
will of the promisor then it’ll not be a good
consideration.

2. It should move at the desire of

the Promisor.
10
The person who wishes to enforce the
contract must show that they provided
consideration; it is not enough to show
that someone else provided consideration.
 The promisee must show that
consideration "moved from" (that is it was
provided by) him. 

3. It may move from the promisee

or any other person.
11
If one person has a valid claim against
another but promises to forbear from
enforcing it, that will constitute valid
consideration if made in return for a
promise by the other to settle the claim.
Raghu borrows $400 at 5% interest from
Praku and fails to pay. Praku can exercise
his right of suing Raghu but instead if he
settles for higher interest, still it’ll
constitute good consideration.
4. It may be an act or Forbearance
to sue
12
PAST CONSIDERATION

Ifone party performs an act, and the other party

then makes a promise, the consideration for the
promise is said to be in the past.

 The past consideration is valid in English law.

However in Indian law, the consideration can only
be present and future.

 For example, Salary to workers. The consideration

is past for the companies.

5. It may be past, present or future

13
PRESENT OR EXECUTED CONSIDERATION:
When a consideration is given
simultaneously with a promise. Example,
In a cash sale.

FUTURE OR EXECUTORY CONSIDERATION:

When a consideration from
one party to the other is to pass
subsequently to the making of the
contract.

14
 An illegal consideration makes the whole contract
invalid.
 Example: A, B and C enter into an agreement for
the division of profits among them acquired, or
to be acquired, by them by fraud. The agreement
is void, as its object is unlawful.

6. It must not be illegal or immoral

15
Exceptions for contracts without
Consideration

Love and affection

Compensation for voluntary services
Promise to pay a time barred debt
Creation of agency
Completed gift

16
An agreement which is made on the natural love
and affection and if there is no consideration
between such types of the contracts even then
they are enforceable in the court of law.

The agreement is made between two parties on

the basis of near relations between the
parties must in the writing and
it should be registered. 

Love and affection

17
 If an agreement is made to compensate any person for the
past deed or service rendered by that person does not
need any consideration and still can be enforceable in the
court of law.
 If a person promise to another person that he will pay to
the person for his services rendered in the past then this is
a enforceable contract and can be enforced in the court of
law.
 But there are some things which should be noticed when
dealing such types of the contracts the services rendered
by the promisor should be voluntary.
 There is no promise plus promise

Compensation for voluntary

services
18
A promise by a debtor to pay a time
barred debt is enforceable provided it is
made in writing and is signed by the
debtor or by his agent generally or
specially authorized in that half.

The debt must be such “ of which the

creditor might have enforced payment but
for the law for the limitation of suits”

Promise to pay a time barred debt

19
 No consideration, but still contract does
applies here.

Example: Promise to pay Charitable

contributions.

Completed gift
20
No consideration is required to create an
agency [section 185].

Agency
21
Multiple choice questions

22
 Consideration, in the formation of a valid contract,
may be identified as:
 a) The need for fairness in the contract.
 b) The intention of the parties to be legally bound.
 c) A balance in the terms of the agreement.
 d) The 'bargain' element of a contract.

23
 Consideration,in the formation of a valid contract,
may be identified as:

 d) The 'bargain' element of a contract.

24
Shahid orders a pizza by telephone, and
says he will pay on delivery. Which of the
following would constitute consideration?
a.  Placing the call
b.  Promising to pay for the pizza
c.  Handing over the money
d.  Accepting delivery of the pizza

25
Shahid orders a pizza by telephone, and
says he will pay on delivery. Which of the
following would constitute consideration?

b.  Promising to pay for the pizza

26
Consideration must be something which
the Promisor
• A)Is already bound to do
• B)Is not already bound to do
• C)May voluntarily do
• D)Must not do

27
Consideration must be something which
the Promisor

• B)Is not already bound to do

28
 Arnold contracts with Nina to paint the interior of
her flat for $200. Halfway through the work he
asks for an additional $100. When will he be
entitled to the extra payment?
 a. If he runs out of paint and needed to buy more.
 b. If Nina asked him to also paint the exterior of
the flat
 c. If he realized he had undervalued the work.
 d. If he realized Nina could afford more than $200.

29
 Arnold contracts with Nina to paint the interior of
her flat for $200. Halfway through the work he
asks for an additional $100. When will he be
entitled to the extra payment?

 b. IfNina asked him to also paint the exterior of

the flat

30
 Consideration in a contract

 A)May be present or future only

 B)Must be present only
 C)Must be future only
 D)may be past, present future

31
 Consideration in a contract

 D)may be past, present future

32
 Paulemploys Steve as a salesman. Last month
Steve’s sales increased by 30%. Paul was so
happy that he promised to give him bonus by the
end of the year. The bonus is an example of
a) Exeuted Consideration
b) Executory Consideration
c) Past Consideration
d) Of a promise that does not constitute
consideration

33
 Paul
employs Steve as a salesman. Last month
Steve’s sales increased by 30%. Paul was so
happy that he promised to give him bonus by the
end of the year. The bonus is an example of.

c) Past Consideration

34
 Which of the following is a correct statement?
  A) Consideration needs to be neither adequate
or sufficient  
 B) Consideration needs to be adequate, but not
sufficient  
 C) Consideration needs to be sufficient, but not
adequate  
 D) Consideration needs to be both adequate and
sufficient

35
 Which of the following is a correct statement?

• C) Consideration needs to be sufficient, but not

adequate.

36
 Gregbought a laptop from Simple Electronics. He
put down a deposit of $100 and agreed to pay
the balance of $1400 upon the delivery of the
computer. The balance owed is an example of

a) Exeuted Consideration
b)Executory Consideration
c) Past Consideration.
d)None of the above

37
 Gregbought a laptop from Simple Electronics. He
put down a deposit of $100 and agreed to pay
the balance of $1400 upon the delivery of the
computer. The balance owed is an example of

b)Executory Consideration

38
 A promise to subscribe to a charity. The
promise is a
A) Valid contract
B) Voidable contract
C)Void contract
D)Void Agreement

39
 A promise to subscribe to a charity. The
promise is a

C)Void contract

40
 Would you be able to sue a newspaper if a
free DVD promised to be included in the paper is
missing?
 a.  No, as there is no consideration
 b.  Yes, as consideration can be found for the
promise of the DVD
 c.  No, as promotional offers are not meant to be
binding
 d.  Yes, as promotional offers are always binding

41
 Would you be able to sue a newspaper if a
free DVD promised to be included in the paper is
missing?

 b.  Yes, as consideration can be found for the

promise of the DVD

42
LINKS:
  http://www.netlawman.co.in/acts/indian-contract-act.php
 http://www.lawteacher.net/contract-law/lecture-notes/consideration-l
ecture.php
 http://www.lawteacher.net/contract-law/cases/consideration-cases.p
hp
 http://www.blurtit.com/q902823.html
 http://en.wikipedia.org/wiki/Category:English_contract_case_law
 http://cw.routledge.com/textbooks/9780415481373/questions.asp?u
nit=3
 http://www.oup.com/uk/orc/bin/9780199544455/resources/a_mcqs/
ch08/?view=Standard

References
43