Ans.CONSIDERATION
1) Consideration
is an essential element in a contract. It is the normal 'badge of
enforceability'. Subject to certain exceptions, an agreement is not enforceable
unless each party to agreement gets something. This "something” is called
consideration. It is also called as “quid pro quo”
2) A
promise without consideration is called nudum pactum. The law will not enforce
a bare promise (nudum pactum) but only a bargain i.e. promise supported by
consideration.
3) According
to Pollock “Consideration is the price for which the promise of the other is
bought”. Consideration is also defined as the ‘element of exchange in a
contract'.
4) In
the English case, Curie v. Misa (1875) L.R Ex. 153 consideration was defined as
"some right, interest, profit or benefit accruing to one party, or some
forbearance, detriment loss or responsibility given, suffered or undertaken
by the other”. In simple words, consideration is 'a benefit to one party or a
detriment to the other'.
5) Section
2(d) of the Contract Act define consideration as follows:
a. “When,
at the desire of the promisor,
b.
the promisee or any other person
c. has
done or abstained from doing, or does or abstains from doing, or promises to do
or to abstain from doing, something,
d. such
act or abstinence or promise is called a consideration for the promise."
ESSENTIALS OF VALID
CONSIDERATION:
1) Consideration
must move at the desire of the promisor
The act or abstinence must
be done at the desire of the promisor. If it is done at the instance of a third
party or without the desire of the promisor, it is no consideration. In Durgaprasad v. Baldev 1880 3 ALL 221, the plaintiff,
baldev, at the desire and request of the collector of the town expanded money
in the construction of a market in the town. Subsequently the defendants,
Durgaprasad & ors. Occupied
the shops in the market. Since the plaintiff had spent money for the
construction of the market, the defendants in consideration thereof, promised
to pay to plaintiff, a commission on the articles sold through their
(defendants) shops in that market. Defendants however, failed to pay the
promised commission, the plaintiff brought an action to recover the promised
commission. It was held that they were not bound to pay as it was without
consideration and hence void)
However, consideration need
not be to the benefit of the promisor. In Kedarnath v. Gorie
Mohamed (1886) ILR 14 Cal 64, on the strength of the promise of the
defendant to give donation the plaintiff started the construction of town hall.
It was held that the defendant was liable to pay as the construction work
started by the plaintiff was done at the desire of; the defendant (the
promisor) so to constitute consideration. However, if the plaintiff that is
promisee did not incurred any liability on the promise of the donation then the
defendant is not liable (Abdul Aziz
v. Masum Ali, 1914).
2) Consideration may
move from the promisee or any other person
Consideration may be
supplied by the promisee or any other person. But the stranger to the
consideration will be able to sue only if he is a party to the contract. The
leading case is of Madras High Court in Chinnaya
v. Ramaya (1882) 4 Mad 137.
An
old lady (A) had a highly valued estate. She made a contract with her daughter
(R) that the whole of the property shall be gifted to R if R agrees to pay
annuity to C (C was the sister; of A). R made a contract with C agreeing to
pay C annuities. After the death of A, R stopped - the payment of annuities on the ground that
no consideration had passed from C to R and therefore agreement between C and R
was void The Court held that the consideration had been furnished to R (since
the property was gifted to R at the desire of R). It was immaterial that A had
furnished this consideration. As long as there is consideration in a contract,
it is immaterial as to who has given this consideration.
3) Consideration
may be an act or abstinence
A person may promise to do
something or not to do something for a promise. To do or not to do something in
return is consideration. If A promises to give X ₹ 10,000 to B, if B stops smoking, it will be a good
consideration.
4) Consideration
may be past, present or future
When the consideration of
one party was given before the date of the promise, it is said to be past. Past
consideration means the consideration for a promise given by a party before the
promise is made. It is the consideration given earlier by a party and the
promise is made thereafter. Such a consideration given by a party must be at
the desire of the promisor. Past
voluntary services rendered by a party cannot be said to be the past
consideration.
Example: A requests B to search out his lost cow. B searched out and deliver the
cow to A. thereafter A promises to pay B ₹ 500 as a reward. Here, the efforts to B at the request of A constitutes
a valid past consideration for the promise by A to pay ₹ 500 to B. The
consideration by B was given before the promise to pay is made by A.
Consideration which moves
simultaneously with the promise is called present or executed consideration.
Cash sales are good examples of present or executed consideration. The seller
delivers the articles sold and the buyer simultaneously pays the price of them.
When the consideration is
to move at a future date, it is called future or executory consideration.
Example: X promise to deliver to Y certain electric appliances as soon as he
receives them from the whole-seller at Bombay and Y promises to pay ₹ 5,000
against the delivery of the articles. Here is future consideration which is to
be performed by both the parties when supplies are received from Bombay.
5) Consideration
need not be adequate
Consideration need not be adequate nor equivalent to
promise.
Illustration: A agrees to sell his horse worth ₹ 1,000 fort ₹ 10 only. The consideration is valid though inadequate, as
there is something of value to be given by the buyer (Attached to Sec. 25).
However, Sec. 25 (Explanation 2) provides that
inadequacy of the consideration may be taken into account by the Court in
determining the question whether the consent of the promisor was freely given.
6) Consideration
must be real and not illusory
Consideration must be real or of some value in the eyes
of law. It should not be physically impossible or illegal or illusory for e.g.
to make a dead man alive.
Instances of good
consideration:
- Forbearance to sue;
- Compromise of disputed
claims
- Composition with creditors
- To avoid disputes in future
7) Consideration must be
lawful
Consideration given for an
agreement must be lawful one. Consideration must not be illegal, immoral or
opposed to public policy.
8) Consideration must
not be a pre-existing obligation or duty
Consideration must not be
something, which a person is already bound by law to do. Discharging of
pre-existing obligation is no consideration. A person may be bound to do
something by law, e.g. to give evidence when called by the Courts. Performance
of a legal obligation is no consideration for a promise and therefore the
witness cannot demand money to give evidence.
