PAST CONSIDERATION

Consideration means something of value that both parties exchange in a contract. Section 2(d) of the
Indian Contract Act, 1876 (the Act hereinafter) defines consideration as When, at the desire of the
promisor, the promise or any other person has done or abstained from doing, or does or abstains from
doing, or promises to do or to abstain from doing, something such act or abstinence or promise is called a
consideration for the promise. A promise is said to be made for past or moral consideration when the
promisors motivation is to repay a past benefit that gave rise to a moral but not legal need to repay. In the
eyes of law past consideration or moral consideration is no consideration. A contract with no
consideration is null and void. Thus a promise of this sort would not be legally enforceable. There are
certain exceptions which will be examined later.
Consideration must be induced by a promise made by the promisor. It refers to an act that occurs as the
result of a contract. It is a general rule that consideration flows from the promisee to the promisor, in case
of the past consideration the promisee has technically not been identified. If A loses a ring which B,
voluntarily recovers for him then A is under no legal obligation to remunerate B. It is only out of gratitude
that A would feel the need of repaying B. A might then go ahead and promise B a prize. In this example,
the prize is a manifestation of a moral duty and not a legal duty. The law does not recognize this.
Therefore, B cannot approach the court asking relief from non-performance on As part.
However, the views on this concept are changing. The English law review committee in 1937 suggested
scrapping this rule. Contract law in its nature focusses on the two parties who are engaging in the
contract. There are provisions in the Indian Contract Act, 1876 which support this viewpoint. It does not
take into account the adequacy of consideration, as long as both the parties are satisfied. It also focusses
on the privity of contract. Thus in a situation where the promisor wants to recognize a past act as
consideration and remunerate a fellow person he must have the option. 1
An important exception has been established by the case of Lampleigh v Brathwait2 in 1616. In this case,
the defendant, who had committed murder, requested the plaintiff to travel to the king and ask for a
pardon on his behalf. The plaintiff travelled and rode on his own expense and managed to get the pardon.
The defendant later promised the plaintiff a reward of one hundred pounds. The plaintiff brought action
1 Avtar Singh, Contract & Specefic Reief, 124 (Eastern Book Company 2010) (1973)
2 80 ER 255

when he refused to pay. Defendant was held liable. The modern exception that flows from this case is
this: when there is a mutual understanding that service rendered at ones request would be subsequently
paid off, the subsequent promise is nothing but a fixation of reasonable compensation for the service. In
addition to a request, there must also be an implied promise of compensation. 3
This exception is more likely to arise in a commercial context. It is generally assumed that services
performed would be reasonably repaid eventually. For example, if a mechanic fixes a car he expects to be
paid for it subsequently; it would be a different case where a friend fixes the car.
The rule laid by Lampleigh v Brathwait4 has been embodied by the language of Section 2(d). The section
talks about has done or abstained from doing . It clearly mentions an act which the promisee had
done or refrained from doing at the request of the promisor. When X does something for Y without an
immediate promise, it may be treated as consideration for a subsequent promise from Y to X.
We should also take note of Past Voluntary Service. A voluntary service refers to service performed
without request and there is a subsequent promise to repay (out of gratitude or a moral duty). Thus if A
had promised B a prize in India he would have been liable to pay him. The situation is different in India
because of Section 25(2). It states that all contracts without considerations are null except when A
promise, to compensate, wholly or in part, a person who has already voluntarily done something for the
promisor. Thus a promise to pay back a service rendered without request is a lawful contract.
The concept of past consideration stems from an old established principle of English law which believes
that promise must be coextensive with the consideration. 5 Thus contracts with past consideration are null
except in cases described above. This rule, however, is not followed in India due to specification given in
Section 25(2).

3 The Yale Law Journal, Vol. 29, No. 7 (May,1920), pp. 800-801
4 Id 2
5 (1842) 3 Q.B. 234