Consideration

Importance of consideration:

A promise without C is purely gratuitous and, however sacred and binding in honor it may be, cannot create a legal obligation.

Contract = promise + the C for the promise Thus generally, a contract can not be thought of without

consideration. “No consideration, no contract” is the rule of law.

Since agreement Sec 2(e), is a promise in exchange for a promise, each promise forming consideration for other. It will therefore be an inconsistency to think of an agreement and consequently contract without C.

Thus, we can say: Except in certain cases, a contract without C cannot be

thought of and if made, it is devoid of any legal obligation.

Rules as to consideration

C must move at the desire of the promisor.C may move from the promisee or any other

person. Stranger to contract V. stranger to C A stranger to consideration can sue but a stranger

to a contract can not. Exceptions: Beneficiary in a trust Provision of marriage expenses of female in joint hindu family Family members who were not part in a family settlement Assignment to a contract An acknowledgement of a liability

C need not be adequate.C must be real and valuable.C must be legal.C may be present (executed), future (executory)

or past.

Exceptions to the rule “No Consideration no contract

”

An agreement without C is valid if: It is expressed in writing and It is registered (under the law of R), and It is made on account of natural love and affection, and Made between parties standing in a near relation to each other.

[Section 25(1)]

A promise without C is valid if, “it is a promise to compensate wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do”. [Section 25(2)]

A promise to pay, wholly or in part a debt which is barred by the law of limitation can be enforced if (a) it is in writing, and (b) is signed by the debtor or his authorised agent. [Section 25(3)]