Consideration | Indian Contract Act 1872 | CA Foundation |
Business Law Chapter 1 |
Consideration is an essential element in a contract, which refers to something in return for a
promise or action. It could be monetary or non-monetary, but it must have value. For example, if
you pay me a fee for teaching you, the consideration for me is the fee you paid. Consideration
can come from the promisee or a third party who is not part of the contract. For instance, if a
daughter promises to pay for her old lady's sister's expenses, that would be a third-party
consideration.In India, consideration is allowed, and it follows three principles: Present
consideration – something given or done at the time of the contract.Executed consideration –
something already given or done before the contract is formed.Executory consideration –
something to be done or given in the future.If an act is performed in the past, and later,
consideration is promised for that act, it is called deemed consideration.
An agreement was made between a client and their lawyer that the client would pay an
additional sum if the suit was successful. This additional sum was in addition to the fees
already settled upon. However, it was held that this promise was void as there was a lack of
consideration as the lawyer was already under a preexisting obligation to render the best
services under the original contract. In order for consideration to be present, there must be
something given in return for a promise. The case of Durga Prasad versus Pull indicates that
consideration must be provided at the desire of the promiser. For example, the collector of the
town ordered person A to build certain shops. Person B later occupied one of the shops and
offered to pay person A some amount. However, person A refused to accept the payment and
consequently sued person B. The court held that as the shop was not built at the desire of
person B, they were unable to ask for payment from person A. Another example in which
consideration is not required is when there is a natural love and affection between two parties.
However, for this to be valid there should be an agreement in writing, near relation between the
parties, and there should be a natural love and affection at the time of entering into the contract.
In conclusion, without consideration, a contract may not be valid. However, there are some
exceptions to this rule such as natural love and affection between parties, as long as certain
conditions are met.
The law stipulates that if someone has given a gift, no consideration is necessary from the other
person. This means that an agent can be appointed without consideration and any debt incurred
by them will be valid and not subject to repayment of the gift.
Business Law Chapter 1 |
Consideration is an essential element in a contract, which refers to something in return for a
promise or action. It could be monetary or non-monetary, but it must have value. For example, if
you pay me a fee for teaching you, the consideration for me is the fee you paid. Consideration
can come from the promisee or a third party who is not part of the contract. For instance, if a
daughter promises to pay for her old lady's sister's expenses, that would be a third-party
consideration.In India, consideration is allowed, and it follows three principles: Present
consideration – something given or done at the time of the contract.Executed consideration –
something already given or done before the contract is formed.Executory consideration –
something to be done or given in the future.If an act is performed in the past, and later,
consideration is promised for that act, it is called deemed consideration.
An agreement was made between a client and their lawyer that the client would pay an
additional sum if the suit was successful. This additional sum was in addition to the fees
already settled upon. However, it was held that this promise was void as there was a lack of
consideration as the lawyer was already under a preexisting obligation to render the best
services under the original contract. In order for consideration to be present, there must be
something given in return for a promise. The case of Durga Prasad versus Pull indicates that
consideration must be provided at the desire of the promiser. For example, the collector of the
town ordered person A to build certain shops. Person B later occupied one of the shops and
offered to pay person A some amount. However, person A refused to accept the payment and
consequently sued person B. The court held that as the shop was not built at the desire of
person B, they were unable to ask for payment from person A. Another example in which
consideration is not required is when there is a natural love and affection between two parties.
However, for this to be valid there should be an agreement in writing, near relation between the
parties, and there should be a natural love and affection at the time of entering into the contract.
In conclusion, without consideration, a contract may not be valid. However, there are some
exceptions to this rule such as natural love and affection between parties, as long as certain
conditions are met.
The law stipulates that if someone has given a gift, no consideration is necessary from the other
person. This means that an agent can be appointed without consideration and any debt incurred
by them will be valid and not subject to repayment of the gift.
