Ans.'NO CONSIDERATION NO
CONTRACT' - EXCEPTIONS TO THE RULE
The general rule is “an
agreement made without consideration is void” (Opening words of Sec. 25).
Thus where A promises, for
no consideration, to give to B ₹ 1000 this is a void agreement.
However, sec. 25 also
mentions some exceptions to the general rule. These exceptions are given below:
A. Agreement
made on account of natural love and affection [sec. 25(1)]
An agreement made without
consideration is enforceable if it is
a) made on account of natural
love and affection,
b) between parties standing in
a near relation to each other,
c) expressed in writing, and
d) registered under the law.
In
Rajlakhi Debi v. Bhootnath Mukerjee case (1900) 4 Cal WN 488, a husband promised to pay
to his wife, after constant quarrels between them, a fixed monthly amount for
her maintenance and separate residence without any consideration. The promise
was in writing and registered When he refused to pay, the wife filed a case.
She was not allowed anything by court on the ground that the exception was not
applicable as there was no natural love left between them.
B. Agreement
to compensate for past voluntary service [sec. 25(2)]
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. The following
two situations are covered by this section:
i) Voluntary
Services: When there is a voluntary
act by one party and there is a subsequent promise to pay compensation to the
former. E.g. A finds B's purse. B promises to give him ₹ 500 this promise is enforceable.
ii) Legally
Compellable Duty: Another situation covered
by the exception is where the promisee has done something for the promisor,
"which the promisor was legally compellable to do”. A subsequent promise
to pay for such an act is enforceable. E.g. T supports the son of F. F promises
to pay the expenses to T. Here T has done something, which the promisor was
legally- bound to do. This is a valid contract.
C. Agreement
to pay a time-barred debt [sec. 25(3)]
Where there is an
agreement,
a) made in writing and
b) signed by the debtor, or by
his authorised agent,
c) to pay wholly or in part a
debt barred by the law of limitation, the agreement is valid even though it is
not supported by any consideration.
A time barred debt is one
which remains unpaid or unclaimed for a period of 3 years, hence it cannot be
recovered under the Indian Limitation Act and therefore a promise to repay such
a debt is without consideration, hence the importance of the present exception.
D. Completed Gift
Gift is transfer of
property without consideration. In order to be valid a gift does not require
consideration. As per Explanation 1 to section 25, gifts given by donor to
donee are valid. Once a gift has been actually given, the donor cannot demand
it back on the ground that there was no consideration.
Promise for a donation is
not a gift. As such a promise for a donation is invalid for want of
consideration.
E. Contract of Agency
Sec. 185 of the Contract
Act lays down that no consideration is necessary to create an agency.
F. Bailment
Sec. 148 of the Contract
Act lays down that no consideration is necessary in case of a gratuitous
bailment.
G. Remission.
Sec. 63 of the Contract Act
lays down that where a person agrees to receive less than what is due to him,
such an agreement is said to be an agreement of remission. No consideration is
required for a contract of remission.
H. Guarantee
Sec. 127 of the Contract
Act lays down that under the contract of guarantee, no consideration is
received by the surety, even then the contract of guarantee is valid.
I. Charity
If the promise undertakes
the liability on the promise of the person to contribute to charity, there the
contract shall be valid as held in Kedarnath
v. Gorie Mohammad.
