Essential Elements of Valid Consideration
As per the definition in Section 2 (d), a consideration has the following
essential elements:
1. It must move at the Desire of the Promisor: Any act or abstinence
constituting
consideration must have been done at the desire or request of the
promisor. If it is done at the
instance of a third party or without the desire of the promisor, it will not be
a good
consideration. The desire of the promisor may be express or implied.
2. It must move from the promisee or any other person: Under the English
law,
consideration must move from the promisee. Under the Indian law,
consideration may, move
from the promise or any other person, i.e., even a stranger. This means
that as long as there is
consideration for a promise it is immaterial who has furnished it. But the
stranger to
consideration will be able to sue only if he is a party to the contract. In the
case of Chinayya
vs. Ramayya, a father left his entire property to his daughter under the
condition that she will
pay a certain amount of money annually to her uncle (i.e., father’s
younger brother). The
daughter promised to pay the agreed amount annually, but stopped doing
it after a time on
the plea that no consideration moved from her uncle to herself, but the
plea was rejected by
the court. It was held that an indirect consideration had moved from her
uncle. The law
stipulates that ‘a stranger to consideration can sue but a stranger to a
contract cannot’.
3. Consideration may be past, present or future: The words used in
Section 2 (d) — has
, done or abstained from doing (past); or does or abstains from doing
(present); or promises to
do or to abstain from doing (future) — indicates that consideration may be
past, present or
future. The Indian Contract Act recognises past, present and future
considerations whereas
the English law does not recognize a past consideration.
When the consideration for a present promise was given before the date
of promise, it is said
to be past consideration. A past consideration, if given at the request of
the promisor will
support a subsequent consideration.
When the consideration for a promise is given simultaneously with the
promise, it is called
present or executed consideration. A present consideration consists in
doing or abstaining
from doing something.
A future or executory consideration is a promise to do or give something
in return in future
for the promise then made. It is also called a promise for the promise.
Consideration need not be adequate: Consideration means ‘something in
return’. This
‘something in return’ need not necessarily be equal in value to ‘something
given. The law
simply provides that a contract should be supported by consideration. So
long as
consideration exists, the courts are not concerned as to its adequacy,
provided it is of some
value. Adequacy is for the parties to decide at the time of making the
agreement. Inadequacy
is no ground for refusing the performance of the promise, unless it is
evidence of fraud.
5. Consideration must be real and not illusory: Though consideration need
not be adequate,
As per the definition in Section 2 (d), a consideration has the following
essential elements:
1. It must move at the Desire of the Promisor: Any act or abstinence
constituting
consideration must have been done at the desire or request of the
promisor. If it is done at the
instance of a third party or without the desire of the promisor, it will not be
a good
consideration. The desire of the promisor may be express or implied.
2. It must move from the promisee or any other person: Under the English
law,
consideration must move from the promisee. Under the Indian law,
consideration may, move
from the promise or any other person, i.e., even a stranger. This means
that as long as there is
consideration for a promise it is immaterial who has furnished it. But the
stranger to
consideration will be able to sue only if he is a party to the contract. In the
case of Chinayya
vs. Ramayya, a father left his entire property to his daughter under the
condition that she will
pay a certain amount of money annually to her uncle (i.e., father’s
younger brother). The
daughter promised to pay the agreed amount annually, but stopped doing
it after a time on
the plea that no consideration moved from her uncle to herself, but the
plea was rejected by
the court. It was held that an indirect consideration had moved from her
uncle. The law
stipulates that ‘a stranger to consideration can sue but a stranger to a
contract cannot’.
3. Consideration may be past, present or future: The words used in
Section 2 (d) — has
, done or abstained from doing (past); or does or abstains from doing
(present); or promises to
do or to abstain from doing (future) — indicates that consideration may be
past, present or
future. The Indian Contract Act recognises past, present and future
considerations whereas
the English law does not recognize a past consideration.
When the consideration for a present promise was given before the date
of promise, it is said
to be past consideration. A past consideration, if given at the request of
the promisor will
support a subsequent consideration.
When the consideration for a promise is given simultaneously with the
promise, it is called
present or executed consideration. A present consideration consists in
doing or abstaining
from doing something.
A future or executory consideration is a promise to do or give something
in return in future
for the promise then made. It is also called a promise for the promise.
Consideration need not be adequate: Consideration means ‘something in
return’. This
‘something in return’ need not necessarily be equal in value to ‘something
given. The law
simply provides that a contract should be supported by consideration. So
long as
consideration exists, the courts are not concerned as to its adequacy,
provided it is of some
value. Adequacy is for the parties to decide at the time of making the
agreement. Inadequacy
is no ground for refusing the performance of the promise, unless it is
evidence of fraud.
5. Consideration must be real and not illusory: Though consideration need
not be adequate,
