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CONSIDERATION

Third essential of a valid contract It is the price at which the promise of the other

is bought

Promisor not bound by promise and promiseecannot enforce the promise, unless the promisee

has given something in return for the promise

The something in return for the promise iscalled consideration

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Definition

When at the desire of the promisor, the promise or any

other person has done something or has abstained from

doing something, does something or abstains from

doing something, promises to do something or abstainfrom doing something, such act, abstinence or promise

is called consideration

Eg: In a contract for sale of goods, the consideration

underlying is the price paid for the goods sold

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Forms of consideration

Money Services

Goods

Sacrifice (which is of value to the

other party)

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Consideration may be

Positivebenefit to the promisor

Negative

detriment to the promisee

loss or responsibility to the promisee

- where the promisee gives up something which but for

the promise he is free not to give up or where he doesnot give up something which but for the promise he isfree to give up

Case study

Kedarnath vs Gorie Mohammad

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Essentials of a valid consideration

1. Must flow at the desire of the promisor

Act or abstinence must be done or promised to be done in accordancewith the desire or request of the promisor

Acts done or services rendered voluntarily or at the desire of a thirdparty or without the desire of the promisor shall not form valid

consideration

Case studyDurga Prasad vs Baldev

2. From promisee or any other personneed not flow from promisee only

- C may move from the promisor or any other person if the promisor has no

objection- if C flows from third party, it must be at the desire of the promisor

Case studyChinnaya vs Ramaya

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3.Act, abstinence or promiseC must be something of value- may consist of an act, abstinence or promise which is of value to

the promisor or detriment to the promisee

4. Past, present or futurePastsomething is done before the date of promise

Presentgiven simulteneously with promise

Futurepromise for a promise

5. C must be legal

must not be illegal, immoral or opposed topublic policy

6. C need not be adequate C must be present but need not beadequate provided that the consent of the promisor must befreely given

7. C must be real and competent

not illusory, vague, impossibleor uncertain

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Agreement without consideration is void

General ruleNo C, no contract

Exceptions

C not necessary in certain cases

1. Agreement on account of love and affection

- Parties stand in near relationship

- Natural love and affection

- Agreement to be in writing and registered

2. Compensation for past voluntary service a promise for a past

voluntary act for the promisor

3.

Promise to pay time barred debt

must be in writing4. Gift

5. AgencyC not reqd for creation of agency