• brillopedia

CONSIDERATION- AN ESSENTIAL ELEMENT FOR A CONTRACT

Updated: Nov 11, 2020

By

Sandeep Harish B, III year of B.A.,LL.B.


Introduction

In every contract have a proper offer, acceptance and consideration. These are the essentials for the contract. These conditions are not fulfilled and the contract is void. In general rule, the contract without consideration is void. Each contract has proper valid consideration is essential. So every agreement without any consideration is void. A valid consideration is enforced by the court of law. In this maximum ‘ex nudo pacto non oritur actiondefine that nothing arises out of a nude contract. It is known as ‘Nudam Pactum’. So the consideration is must for a valid contract.

According to Winfield and Salmond defines “A promise without consideration is a gift, one made for consideration is the bargain”. Section 25 of the Contract Act deals with the contract without consideration and tells about the exceptions.

Exceptions to consideration

· Love and affection theory

· Compensation for voluntary service

· Promise to pay a time-barred debt

· Gifts

· Charitable subscription

· Agency

Love and affection theory

An agreement is expressed in the registered or writing under enforcing by the law and the agreement is made that a natural love and affection between these parties are closely related, and this agreement is enforceable, but in this agreement has no consideration.

Necessary Conditions for love and affection

· The agreement made between the blood relations or closed relations

· The agreement must be expressed in the register or writing format under the law

· The agreement must be made on natural love and affection.

Example: A father has more love and affection for the daughter. So the father has given some property to the daughter by written and the registered document. In this agreement is no consideration. So this agreement is enforceable by the court. So it is a valid contract.

Venkataswamy vs. Rangaswamy[1]

Venkataswamy has love and affection for his brother Rangaswamy. Venkataswamy promises to discharge the Rangaswamy’s debts by registered agreement. The court held that Rangaswamy can file the case for Venkataswamy to discharge the debt.

Ram Dass and ors. vs. Krishan Dev[2]

In this case, the court held that a registered and written agreement based on the natural love and affection between the relations is enforceable by the law. Hence, the consideration is not necessary.

Compensation for voluntary service

If any person has voluntarily done something for the promisor, the promisor has to pay the compensation to the promisee. It is enforceable by the law without consideration. The promisor to pay the amount for past voluntary services is binding without the consideration.

Necessary conditions for compensation for voluntary service

· The service or act must be voluntary not by any other compulsion

· The promisor has agreed to compensation for the promise’s voluntary services

· Any services or act must be to the promisor

· The promisor is existences at the time of services or act was done

Example: A finds B’s dogs and gives it to him. B promise if any person finds my dogs I have to pay rupees 500 for that person. So B has to pay the compensation rupees 500 for A. This is a contract.

Promise to pay a time-barred debt

The promise was made by a debtor to pay the time-barred by the debt it is enforceable by the law and without any consideration for an agreement. And agreement must be in a written format and signed by the debtor by his agent. The promise may be paying any part of the debt or whole.

Example: A gives debt for B rupees 10,000 but the debt was barred by the Limitation Act. B signs a written promise to pay ‘A’ rupees 10,000 on account of his debt. This is a contract.

Gifts

Section 25 of the Indian Contract Act says a contract without consideration is void. It is not applied for gifts. If the property is the transfer by the gifts it must be registered and attested by the two persons or witnesses it is a condition. The condition has fulfilled the gifts is valid.

Charitable subscription

The agreement created by the purpose of charitable subscription is not enforceable because the agreement is not supported by the consideration but if any sufficient steps are taken by the achievement of the goal or object depending upon the promise for donation. Then such agreement is enforceable by the law.

Agency

Every agreement consideration is necessary but the agency has no consideration.

Conclusion

Every contract consideration is necessary. Agreement without consideration is void but has some exceptions. The exceptions have consideration and are not necessary to the contract.

[1] AIR 1961 Mad 434

[2] AIR 1986 HP 9