CONSIDERATION

 Section 2(d) of the Indian contract Act defines

consideration as- “When at the desire of the
promisor, the promisee or any other person has
done or abstains from doing, something, such act
or abstinence or promise is called a consideration
for the promise”
ESSENTIALS OF VALID CONSIDERATION-

1. Consideration must move at desire of the

promisor-
The act or abstinence forming the consideration
for the promise must be done at the desire or
request of the promisor.
Durga Prasad Vs Baldeo
2.Consideration may move from the promisee or
any other person-
It may move from the promisee alone but may
proceed from a third person. This means that
even a stranger to the consideration can sue on a
contract, provided he is party to the contract. This
is sometimes called as ‘Doctrine of Constructive
Consideration’.
Chinayya Vs Ramayya
A stranger to a contract cannot sue.
3. Consideration may be past, present or future-
Past Consideration: When something is done or
suffered before the date of the agreement, at the
desire of the promisor.
Present Consideration: Consideration which
moves simultaneously with the person.
Future Consideration : When the consideration
on both sides is to move at a future date.
4. Consideration must be ‘ something of value’-
 The consideration need not be adequate to the promisor
for the validity of an agreement.
 Presence of consideration is important
 However, if consideration is be grossly or shockingly
inadequate, and if one the parties to the contract alleges
that his consent was obtained by fraud, coercion or undue
influence, the court will treat inadequacy of the
consideration as an evidence in support of such allegation.
EXCEPTIONS TO ‘ A STRANGER TO A
CONTRACT CANNOT SUE’

 Where an express or implied trust is created

 Family settlement
 When the defendant constitutes himself, as the
agent of the third party
 In case of agency contracts
 In case of assignment of rights under a contract in
favour of a third party
EXCEPTIONS TO ‘NO CONSIDERATION, NO
CONTRACT’
An Agreement without a consideration is Void. But there
are a few exceptions to this rule-
1. Agreement made on account of natural love and
affection- An agreement made without consideration is
enforceable if, it is (i) expressed in writing , (ii)
registered under the law (iii)made on account of natural
love and affection, (iv) between parties standing in near
relation to each other

Rajlakhi Devi Vs Bhootnath

2. Agreement to compensate for past voluntary service-
A promise made without consideration is also valid, if
it is a promise to compensate, wholly or in part, a
person who has already voluntarily done something
for the promisor, or done something which the
promisor was legally compellable to do.
Therefore, a promise made by a person after attaining
majority for the services received during his minority
is valid.
3. Time Barred Debt-
If a debt is barred by the law of limitation, it is a
time barred debt. Such debt cannot be recovered.
But , any agreement by a debtor to pay a time
barred debt wholly or in part would be a valid
contract even though it would be without
consideration.
4. Completed gift-
As between the donor and donee, any gift actually
made will be valid and binding even though
without consideration. In order to attract this
exception there need not be natural love and
affection or nearness of relationship between the
donor an donee.
The gift must ,however, be complete.
5. Contract of agency-
No consideration is necessary to create an agency
6. Remission by the promisee , of the performance
of the promise-
For an agreement to accept less than what is due ,
no consideration is necessary .
7. Contribution to Charity-
A promise to contribute to charity through
gratuitous, would be enforceable, if on the faith
of the promised subscription, the promisee takes
definite steps in furtherance of the object and
undertakes a liability , to the extent of liability
incurred, not exceeding the promised amount of
subscription.
 Thank you