CONSIDERATION

sec 2(d), 10,23-25

Important Essentials of a Valid Contract.

In simple terms, consideration is what a promissor demands as the price for his promise. Consideration is Which for What Something that a person gives for something received.

Defination:
Section 2 (d) of the Indian Contract Act defines consideration as When at the desire of the promisor, the Promisee or any other person has done or abstain from doing or promises to do something, such act or abstinence is called consideration for promise.

Essential Parts of Valid Consideration

Should be done at the desire of the promisor May be done by the Promisee or any other person

Such act is either or already executed

Examples to get a clear idea of consideration

A agrees to sell a house to B for Rs. 1,00,000. For As Promise, the consideration is Rs. 1,00,000. For Bs Promise, the consideration is House.
A agrees to sell his scooter to B for Rs. 8,000. In this case Bs Promise to pay the amount is consideration for As Promise to sell the scooter. Scooter Consideration Amount is promise. A promises to maintain Bs child and B promises to pay Rs. 1000 to A per month for this purpose. Here the promise of each parties is the consideration for the promise of the other party.

Essential and Legal Rules for Valid Consideration

1.Must move at the desire of the Promisor. 2.May Move from the Promisee or any other person.

3.May be Past / present / Future.

4. Need not be adequate. 5.Must be real and not Illusory.

6.Must be Lawful.
7.Must be something which the Promisor is not already Bound to do. 8.May be either Positive or Negative.

1. Must move at the desire of the Promisor.

Coniseration for promise, must be done or promised to be done according to the desire of the promisor. The act shall not be good consideration for a promise unless it is done at the desire of the promisor.
For E.g. Mr. A sees Bs house on fire and helpsin extinguishing it. B did not ask for his help. Thus A cannot demand payment for his services. A contractor constructed a Shopping Centre at the request of the Municipal Corporation. The defendants who occupied the shops, promised to pay the plaintiff a commission on the article sold through the shop in consideration of the money spent on the construction. The Plaintiff sued for commission recovery, it was held that since the promise was not supported by the consideration hence it is void agreement, as the plaintiff did not construct the shops at the desire of the defendant.

2. May Move from the promisee or other person

Promisee is the person to whom the promise is made. Under the Indian Law, consideration may move from the promisee or any other person. It means a person can sue if the consideration is done by third person.

Eg: A an old lady, by a deed of gift made over property to her daughter R, that the daughter should pay annuity by to As brother C as was done earlier. R on the same day executed a writing in favour of her uncle D for agreeing to pay to c. Later she did not pay to c stating that there was not consideration between C and D. Hence Sec 2 (d) clearly states that a stranger to the consideration is entitled to maintain the suit.

2. May Move from the promisee or other person

Promisee is the person to whom the promise is made. Under the Indian Law, consideration may move from the promisee or any other person. It means a person can sue if the consideration is done by third person.

Eg: A an old lady, by a deed of gift made over property to her daughter R, that the daughter should pay annuity by to As brother C as was done earlier. R on the same day executed a writing in favour of her uncle D for agreeing to pay to c. Later she did not pay to c stating that there was not consideration between C and D. Hence Sec 2 (d) clearly states that a stranger to the consideration is entitled to maintain the suit.

3. May be Past, present or Future

Section 2(d) defines that consideration clearly makes it clear that it may be past , present or future, as it states Has done or abstained from doing (past), or does or abstains from doing (present) or promise to do or abstain from doing (future) something

Past Consideration
A Past consideration is wholly done, forborne or suffered before the making of the agreement. This is present promise is based on the consideration already taken place.

A found Bs purse and gave it to him. B promised to give Rs. 100 as a reward. Here for Bs promise the act of A in finding Bs purse is the past consideration.

Present Consideration
Consideration which moves simalteneously with the promise is called present consideration. Cash sales provide an excellent example of Present Consideration.

Eg: A receives Rs. 50,000 in cash from B in return of his car which he promises to deliver to B. It is a present consideration for promise to deliver the car.

Future Consideration
When the consideration from one party to other is to pass subsequently to the making of the contract, it will be future consideration Eg. A agreed to sell his car after two weeks at an agreed price. B agreed to pay the price on delivery. Here as the amount of the car are to be transferred in future, therefore the consideration is future for both the Parties.

4. Need not be adequate.

Consideration is something in return. This something in return need not, necessarily be equal in value with something given. It leaves the people to make their own bargain. The law requires that contract should be supported by consideration. E.G : A agreed to sell his car worth Rs. 40,000 for Rs. 25,000to B. As consent to the agreement was freely given. The consideration though inadequate will not affect the validity of the contract.

5. Must be real and not Illusory

Although the consideration need not be adequate to the promise, it should be competent, real and valuable in the eyes of the law. It should not be unreal or illusory.

e.g. A promises to put life in the dead body of Bs son for Rs. 50,000, the agreement is void because of the physical impossibility of the performance.

6. The Consideration must be lawful

The considration must be lawful, it is unlawful if: It is forbidden by law. It is of such nature that, if permitted, it would defeat the provisions of any law. It is fraudulent It involves or implies injury to a person or property of another The court regards as immoral or opposed to public policy.

7. Must be something which the promisor is not already bound to do

A person may be bound to do something by law. Consideration should be more that what the promisee is bound to do either to law or on the basis of the contract.

In a case A received a summon to appear at a trial as a witness on behalf of C. Cpromised him to pay a sum of money for the troubles taken. Any person who receives summons at attend the court is legally bound to give evidence. Therefore it was held hat no considration for the promise.

8. May be either Positive / Negative

The consideration may be a promise to do something or abstain from doing something. To do or not to do positive negative.

E.g. A requested B to Sell cetain goods on credit. B agreed to do so provided C will give guarantee for the payment for the price of goods supplied to A by B. C guarnateed for payment. Here selling from B to A is consideration and for Cs promise to guarantee the payment . This is positive.