Aligarh Muslim University

Malappuram centre,kerala
Session 2018-19

Project report on

Consideration

Submitted by; Submitted to;

Afzal Dr. Shahnawaz malik

18BALLB24 Assist. Professor
GJ3799 AMU-MC,kerala

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TABLE OF CONTENT

1) Introduction
2) Essentials of Consideration
3) Consideration may be Past, Present or Future (Executory)
4) Exception to the Rule in Pinnel’s Case
5) Bibliography

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Introduction

The section 25 of the Indian Contract Act, 1872 openly declares that “an agreement
made without consideration is void…” In other words the presence of consideration
is an essential for a contract to be valid. In England too “promises without
consideration are not enforced, because they are gratuitous”. In England the
contracts are divided into two categories:
1. Contracts under seal, or contracts in the form of a deed. Such contracts are
valid even without consideration.
2. Simple contracts or parol contracts. For validity of such contracts the
presence of consideration is needed.
Consideration in simple words means something in return of a promise which may
either be benefit gained by one party or something lost by the other. So generally
there can be no doubt that for a valid contract, there must be consideration, and also
free consent.

Definitions of Consideration

According to Blackstone;
“Consideration is the recompense given by a party contracting to the other.”
Or the price of the promise.

Sir Fredrik Pollock summarized the position of words adopted by the House of Lords
in 1915: “An act of forbearance of one party or the promise thereof is the price for
which the promise of the other is bought, and the promise thus given for value is
enforceable.

The definition given in Curre v Misa by Lush J is widely accepter and stated
on the next page:
“A valuable consideration in the sense of the law may consist either in some
right, interest, profit or benefit accruing to the one party, or some
forbearance, determent, loss, or responsibility given, suffered or undertaken
by the other…”

Definitions of Consideration under Section 2(d)

Section 2 (d), The Indian Contract Act, 1872 defines consideration as given under:
“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
abstain from doing something, such act or abstinence or promise is called a
consideration for the promise.”

Essentials of Consideration

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The definition of consideration highlights the following essentials to be fulfilled for
the presence of a valid consideration:

1) Consideration to be given “at the desire of the promisor”

2) Consideration to be given “by the promise or an other person”
3) Consideration may be past, present or future, in so far as definition says that the
promisee:
a) Has done or abstained from doing, or
b) Does or abstains from doing, or
c) Promises to do or to abstain from doing, something.
4) There should be some act, abstinence or promise by the promisee, which
constitutes consideration for the promise.

These essentials have been discussed in detail in the project.

1. Consideration at the Desire of the Promisor

The definition of consideration under section 2(d) clearly emphasizes that the
consideration must be given at the desire of the promisor, rather than merely
voluntary or at the instance of some third party.
In the case Durga Parsad v Baldeo:1
The plaintiff, on the order of the Collector of the town, built at his own
expense, certain shops in a bazaar. The shops came to be occupied by the
defendants who, in consideration of the plaintiff having expended money in
the construction, promised to pay him a commission on his articles sold
through their agency in the bazaar. The plaintiff’s action to recover the
commission was rejected. It was held because as the construction had not
been done as per the desire of the defendants, but the order of the collector.
Hence, the consideration was not valid and the defendants not liable for the
same.

2. Consideration by Promisee or any other Person

(Privity of Consideration)

According to the Indian Law2, consideration may be given by ‘the promisee or any
other person’. It means that as long as there is a consideration for a promise, it is
immaterial who has furnished it. It may move from the promisee, or, if the promisor
has no objection, from any other person. But in English Law the position is different,
here the consideration must move from the promisee himself. For example, A
promises to give his watch to B and a consideration of Rs.5000 for the same is given
to A by C and not B himself. This will not be a valid contract in England but in India
it will be valid as the section 2(h) clearly states that “…at the desire of the promisor,
the promisee or any other person” may provide consideration. This can be further
understood in the case of Chinnaya v Ramaya. In this case A, an old lady granted her
estate to her daughter (the defendant) with a direction that the daughter should pay
an annuity of Rs.653, to A’s brothers (the plaintiffs). On the same day, the defendants
made a promise with the plaintiffs that she would pay the annuity as directed by A.
1
(1880) 3 All. 221, Oilfield J at p. 228
2
Section 2(d); Indian Contract Act, 1872

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The defendant failed to pay the stipulated sum. In an action against her by the
plaintiffs she contended that since the plaintiffs themselves had furnished no
consideration, they had no right of action. The Madras High Court held that in this
agreement the consideration had been furnished by the defendant’s mother and that it
was enough consideration to enforce the promise between the plaintiff and the
defendant.
In the above case it can be seen that A enters in a contract with B, but A himself has
not given any consideration to B, but the consideration has been provided by third
party i.e. C to B. Although A is a stranger to consideration, he can still enforce the
contract against B. One has to remember that this is only true under Indian Law and
the situation is different under English Law where the consideration can only move
from the promisee and a stranger to the consideration in no condition can maintain
any action.

3. Privity to Contract

The Doctrine of Privity of Contract in simple words means that only those persons
who are parties to the contract can enforce the same. A stranger to the contract
cannot enforce a contract even though the contract may have been for his benefit. To
explain it with an example, if there is a contract between A and B whose benefit has
been conferred upon C, C cannot file a suit to enforce the contract because only A
and B are the parties to the contract and C is a stranger to the same.
This rule has to be differentiated from the rule stated earlier according to
which in India a person who is a stranger to the consideration can sue. This does not
affect the rule of Privity of Contract.

English Law

In Tweedle v Atkinson3 the plaintiff was to be married o the daughter of one X and in
consideration of this intended marriage X and the plaintiff’s father entered into a
written agreement by which it was agreed that each would pay the plaintiff a sum of
money. X failed to do so and the plaintiff sued his executors. Whitman J considered it
to be an established principle “that no stranger to the consideration can take
advantage of a contract, although made for his benefit.” Thus, although the sole
object of the contract was to secure a benefit to the plaintiff, he was not allowed to
sue as the contract was made with his father and not with him.

This rule was further affirmed in the case of Dunlop Pneumatic Tyre Co. Ltd. v
Selfridge & Co. Ltd.4 by the House of Lords in the following words:
“In the law of England certain principles are fundamental. One is that only a
person who is a party to a contract can sue on it. Our law knows nothing of a
Jus quaesitum tertio arising by way of contract. Such a right may be enforced
by way of contract. Such a right may be enforced by way of property, as for
example, under a trust, but cannot be conferred on a stranger to a contract as
a right to enforce the contract in personam.”
In this case Plaintiffs (Dunlop & Co.) sold certain goods to Dew & Co. and secured
an agreement from them not to sell the goods below the list price and that if they sold
the goods to another trader they would obtain from him a similar undertaking to
3
3 (1861) 1 B.&S. 393
4

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maintain the price list. Dew & Co. sold the motor to the defendants (Selfridge & Co.)
and promised that they will pay to them the sum of £5 for every tyre sold below the
list price. The Plaintiffs sued the defendants for breach of contract for selling below
the list price and not paying the money. The House of Lords held that Dunlop & Co.
could not bring an action against Selfridge and Co. because there was no contract
between the two parties. It was further observed even if it is taken that Dew & Co.
were acting as agents for Dunlop & Co., the latter still cannot maintain an action as
there was no consideration between Dunlop Co., and Selfridge & Co., since the whole
of the purchase was paid b Selfridge & Co. to Dew & Co.

Indian Law

The rule of “Privity of Contract” is applicable in India as it is applicable in England.

Even though under the Indian Contract Act, 1872 the definition of consideration is
wider than the English law, yet the common law principle of Privity of contract is
generally applicable in India, with the effect that only a party to the contract is
entitled to enforce the same.5
In the case of Jamna Das v Ram Avtar 6 here A borrowed Rs.40,000 by executing a
mortgage of her zamindari in favor of B. subsequently she sold the property to C for
Rs.44,000 and allowed C, the purchaser, to retain Rs.40,000 of the price in order to
redeem the mortgage if he thought fit. B sued C for the recovery of the mortgage
money, but could not succeed because he was not a party to the agreement between A
and B.

There are also certain exceptions to this rule of a stranger to contract cannot sue
which are stated on the below:

1. Trust of Contractual rights or beneficiary under a contract

One of the exceptions of the doctrine of Privity of contract was recognized by Lord
Haldane in Dunlop Pneumatic Tyre Co. v. Selfridge & Co. 7, itself. While it is
mentioned that only a party to a contract can sue on it, no such right is conferred on
the third party, it was also stated that “such a right may be conferred by way of
property, as, for example, under a trust.”8 For example, in a contract between A and
B, beneficial right in respect of some property may be created in favor of C. In such a
case C can enforce his claim on the basis of the right conferred upon him depending
upon the particular case there is an obligation in the nature of trust in favor of the
third party, C, arising out of a contract will depend on the facts of the case. 9 The
Indian Law also recognizes this exception in the case of Khwaja Muhammad Khan v.
Husaini Begum10, there was an agreement between the father of the boy and a girl
that if the girl (plaintiff in this case) married a particular boy, the boy’s father (here
the defendant in this case) would pay certain personal allowance known as Kharchi-i-
pandan (bettle-box expenses) or pin money to the plaintiff. It was also mentioned that
a certain property had been set aside by the defendant and this allowance would be
paid out of the income of the property. The plaintiff married the son but defendant
5
Narayani Devi v. Tagore Commercial Corporation Ltd., A.I.R. 1973 Cal. 401 at 405
6
(1911) 30 I.A. 7
7
8
9
10

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failed to pay the allowance paid to him. In an action by the plaintiff to claim this
allowance, the defendant contended that his contract to pay the allowance had been
made only with the plaintiff’s father and not with the plaintiff; she being a stranger to
the contract cannot sue. But it was held that since, the basis of the plaintiff’s claim
being a specific charge on immovable property in her favor, she was entitled to claim
the same as a beneficiary, and as such, the Common Law rule was not applicable to
the facts and circumstances of the present case. It was observed that:
“Here the agreement executed by the defendant specifically charges
immovable property for the allowance which he binds himself to pay to the
plaintiff. She is the only person beneficially entitled under it … although (she
is) not a party to the document, she is clearly entitled to proceed in equity to
enforce her claim.”
In the case of Narayani Devi v. Tagore Commercial Corporation Ltd.11 A held various
shares of value of Rs. 40,500. It was agreed that A would sell his shared to B and in
return B will pay A Rs.500/month and after his death Rs.250/month to his A’s widow
during her life. C stood a surety for B. some payments were made by C to A and after
his death to A’s widow. Thereafter the payments were stopped. A’s widow brought
action against B and C to recover the amount. One of the defendants pleaded that the
plaintiff was not a party to the contract and it was entered into by his husband and
the defendants, she was not legally entitled to sue in respect of this agreement being a
stranger to the contract. The Calcutta High Court rejected this and held that from the
facts and circumstances of the case the obligation the obligation in the nature of trust
was in favor of the plaintiff, and equity was created in her favor and she was entitled
to it even if she was not the party to the contract. A decree was passed in her favor for
the arrears of the amount due.

2. Conduct, Acknowledgment, or Admission

Sometimes there may be no Privity of contract between the two parties, but if one of
them by his conduct, acknowledgment, or admission recognizes the right of the other
to sue him, he may be liable on the basis of the law of estoppel.
In the case Narayani Devi v Tagore Commercial Corporation Ltd.12 discussed
earlier had no contract between the plaintiff and the defendants but the defendants in
their agreement had agreed to pay some money to them even after her husband’s
death. Here the question to sue the defendants arose. After the death of the husband
same payments were received. Apart from this the defendants had also called the
plaintiff to administer some documents in the same respect recognizing her rights. It
was, therefore, held that the had created Privity with the plaintiff by their conduct and
by acknowledgment and admission of her rights hence the plaintiff was entitled to the
action even though at the time of the contract there was no Privity.

3. Provision for marriage expenses or maintenance under family agreement

Where, under a family agreement, the contract is intended to secure a benefit to a

third party, he may sue in his own right as a beneficiary. 13 In the case of Sundara
Aiyangar v. Lakshmiammal14, under a family agreement, the male members of the

11
A.I.R. 1973 Cal. 401
12
13
Mst. Dan Kuer v. Sarla Devi, A.I.R. 1947 P.C. 8: I.L.R. (1946) All.756: (1947) 49 Bom. L.R. 123
14
A.I.R. 1957 A.P. 965

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family made a provision for the expenses of her marriage to be contributed by the
defendants, i.e., her father and brothers. She brought an action to enforce the
agreement between the defendants. It was held that even though the plaintiff was not
a party to the contract, yet the contract constituted a situation like trust in her favor
and therefore, she was entitled to the amount.

Consideration may be Past, Present or Future (Executory)

Section 2(d) of the Indian Contract Act, 1872, recognizes three types of consideration,
namely, Past, Executed and Executory. It says that when at the desire of the promisor,
the promisee or any other person:
1. Has done or abstained from doing, (the consideration is Past.)
2. Does or abstains from doing, (the consideration is Executed or present.)
3. Promises to do or abstain from doing, (the consideration is Executory or
future.)

These have been discussed in detail as under:

1.Past Consideration

Past consideration means that the consideration for the promise had been given
earlier and the promise has been made afterwards. It is, of course, necessary that at
the time the act constituting consideration was done, must have been done at the
desire of the promisor.15 For example in lost or found cases if A looses his watch and
puts out a notice that whoever finds it will get Rs.500 as reward. The person who
finds it has already done the consideration. This amounts to valid (past)
consideration under Section 2(d), and the promise is enforceable. The words “has
done and abstained from doing”, in Section 2(d) of the Indian Contract Act, 1872,
according to Pollock and Mulla16 “declare the law to be that an act done by A at B’s
request, without any contemporaneous promise from B, may be consideration for a
subsequent promise from B to A.”

Past services voluntarily rendered [Section 25(2)]

A voluntary service means a service rendered without any request and there is no
subsequent promise for the same. For example if a person A has lost his watch and
another person B finds it and returns it to A and now asks A to give him a reward for
the same, A is not liable for the same as A has not made any prior promise for the
reward and this is not a contract. The following illustrations also show the difference:
1. A finds B’s purse and gives it to him. B promises to give A Rs.50. This is a
contract.17
2. A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a
contract.18

English Law Regarding to Past Consideration

15
16
17
18
Illustration (d) to Section 25

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According to English law if the act has been done before any promise is made, it is
called past consideration and a past consideration is no consideration.19 The past act
may explain why the promise was given and may, thus, be a motive for the promise,
but it furnishes no legal consideration.20 “The consideration and the promise ought to
go together.”21 An example is McArdle, In re:22
A effect certain improvements to certain property. The ultimate beneficiaries
of the property signed a document declaring that: “In consideration of your
carrying out certain alterations and improvements, we the beneficiaries shall
repay to you the sum of £488 in settlement of the amount spent on such
improvements.” An action to enforce this promise was rejected.

Past consideration at the Promisor’s Request

Past consideration in lieu of a prior request by the promisor is deemed to be a good
consideration. It was established as early as 1616 as in the case of Lampleigh v
Barthwait23 that a past act done at request will be good consideration for a
subsequent promise. The facts were as given on the next page:
The defendant, having committed a murder, requested the plaintiff to labour
and to do obtain pardon from the King. The plaintiff did his best to obtain the
King’s pardon, riding and journeying at his own expense. Afterwards the
defendant promised the plaintiff to give him £100 and then refused to pay. He
was, however, held liable.

On this context there is not much difference between the Indian and English laws.
Indian law recognizes past consideration, when the same is given “at the desire of the
promisor.” Past act done voluntarily is no consideration either in India or England.
In India, however, a voluntarily done consideration can render an agreement valid if
it is declared valid under exception mentioned in Section 25(2). There is no such
provision under English law.

2.Executed or Present Consideration

When one of the parties to the contract performs his part of the promise which
constitutes the consideration for the promise by the other side is called executed
consideration and the performance of the promise by the other side is the only thing
now to be done. For example, A makes an offer to reward Rs. 100 to anyone who his
lost phone and brings the same back to him. B finds the lost item and delivers it to A.
When B does so it amounts to acceptance of the offer which results into a binding
contract under which A will have to pay Rs.100 to B, and also simultaneously giving
consideration for the contract (i.e. the lost object).24 The consideration in this case is
“executed”.
Executed consideration is different from past consideration as executed
consideration is provided simultaneously along with the making of the contract while
past consideration is provided prior to the making of the contract.

3.Executory or Future Consideration

19
See Anson, Principles of the English Law of Contract, 23rd Ed
20

21
22
23
24

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When a person makes a promise in exchange of the promise made from the other side,
the performance of this promise is to be done after making the contract. This is called
Executory consideration. For example, A agrees to sell and B to buy a quantity of
goods at a stated price. In other words, A has promised to sell and B has promised to
buy.

Some Act, Abstinence or Promise by the Promisee Constitutes Consideration

According to Section 2(d), when at the desire of the promisor, the promisee or any
other person has done or abstained from doing, or does or abstains from doing, or
promises not to do or abstain from doing something, such
“act or abstinence or promise” is called consideration for promise. It means that if
nothing is done in exchange for the promise, i.e., where there is no act, abstinence or
promise, there is no consideration.

4.Consideration Received by one of the Joint Promisors.

In case there are joint promisors but consideration has been received by any one of
them, then it is held that the consideration is sufficient and binding on others also. In
Andhra Bank v Anantnath Goel,25 the father received a loan from the bank by the
deposit of title-deeds of his immovable property, but the promissory note, to repay the
loan with interest, was signed by the father and his son jointly, in favor of the bank. It
was held that the son was equally liable with his father on the said promissory note,
even though he himself had received no direct consideration.

5.Subscription for a Charitable Purpose

Consideration is needed in exchange in every promise in order to make it enforceable.

A mere promise to make contribution to a charitable purpose may not make it
enforceable. In Abdul Aziz v Mausam Ali 26 the defendant promised to pay a sum of
Rs.500 as donation for the purpose of repair and reconstruction of a mosque. Nothing
was done and the defendant refused to pay the amount. It was held that nothing could
be done to enforce the same as nothing was done in faith of the promise and no
consideration was given. Therefore, the defendant was not liable for breaking his
promise.
Although, a promise to contribute is not enforceable only till then the promise
has caused something done in faith of the promise.
The English decisions on this point are similar to the Indian ones.

In Re Soames,27 one Soames made a promise to the plaintiffs that he would leave a
sum of £300 by his will for the maintenance of a school which was to be established
by the plaintiffs. On the faith of this promise the plaintiffs established a school. But
there was no such provision in the will of Soames. It was held that the executors of the
promisors will be liable for the same.

6.Consideration Need Not be Adequate

25
26
27

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It is not necessary for the consideration to be adequate to the promise. The courts can
hardly assume the task of setting what is the appropriate consideration for the
promise. According to Explanation 2 to Section 25 of the Contract Act, 1872:
An agreement to which the consent of the promisor is freely given is not void
merely because the consideration is inadequate; but the 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.

The parties are free to make the consideration of their choice. The adequacy of the
consideration is for the parties to consider at the time of making the agreement, not
for the court when it is sought to be enforced. 28 For example, A agrees to sell his
house worth Rs.1,00,00,000 for Rs.1,00,000. A’s consent to the agreement was freely
given. The agreement is a contract notwithstanding the inadequacy of the
consideration.29

7.Consideration must be real

It is necessary for consideration to be real and should not be unsubstantial. In White

v Bluett,30 a son used to complain to his father that his brothers had been given more
property then him. The father promised that he would release the son from his debt if
he stopped complaining. After the death of the father an action was brought by the
executors to recover the debt. It was held that the promise of not facing the father
with the complaints in future was not a good consideration for the father’s promise to
release him from the debt. Therefore the son continued to be liable for the debt.

8.Performance of an Existing Legal Duty in no Consideration

Doing something what a person is already legally bound to do is not a consideration.

But for a proper consideration there should be a promise to do something more than
what a person is already bound to do. In Collins v Godefroy, 31 A received a subpoena,
i.e. presence of a witness to testify, in a case. Thereafter B promised to pay A some
money for the trouble caused to him in appearing in that case. A sued to recover B for
the amount promised. It was held that A was already under a public duty to give
evidence and that the consideration to pay by B did not constitute a good
consideration.

9.Promise to Perform an Already Existing Contractual Duty

If a person is already contractually bound to perform a certain task for B then B’s
promise to pay something additional in return is no consideration. In other words

28
Bolton v Madden, L.R. (1873) 9 Q.B. 55, at 57, per Blackburn J.
29
30
31

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compliance to a legal obligation imposed by a contract is no consideration for
promise. In the case of Ramchandra Chintaman v Kalu Ram:32
The plaintiff accepted a vakalatnama from the defendant to act for him in a
certain suit on receiving his usual fee. Subsequently the defendant agreed to pay him
a certain sum as special reward (inam), if the suit is decided in his favor. The suit was
decided in favor of the defendant, who, however, did not pay the amount. The
plaintiff, therefore, brought the present suit action against him.
Rejecting the action, Westroppe CJ said: “The plaintiff, having accepted a
Vakalatnama was already bound to render his best service as a pleader. There was no
fresh consideration proceeding from the plaintiff when he obtained the agreement.”

Promise to Pay Less Amount than Due

The Rule of Pinnel’s Case

The rule laid down in Pinnel’s Case 33 in English law laid down that in an agreement
payment of a smaller amount in lieu of a valid consideration is not binding as the
agreement is without consideration. This means in spite of the promise to pay the
smaller amount the promisor can claim the whole due amount. In the case a sum of
£8-10 sh. was due to be paid on 11th November, 1600 on the basis of a bond executed
by Cole in favor of Pinnel. On October 1, 1600 Cole paid £5-2 sh. 6d. to Pinnel, and
he accepted the same as the full payment of the original debt. Later Pinnel moved
action against Cole to claim the whole amount on the basis of the bond. It was held
the Pinnel could succeed in recovering as mere partial performance of contract
would not discharge the contract. It was also stated that the original debt could be
discharged only by the introduction of a new element in the contract upon the request
of the creditor, e.g., tender of movable property in lieu of cash, or payment at fresh
place.
This rule doesn’t appear to be logical. In 1937, the Law Revision Committee 34
recommended the abolition of the rule but so far the recommendation has not found
the place in the statute book.

Exception to the Rule in Pinnel’s Case

The various recognized exceptions to the rule, which are as given on the below:
1. Payment in kind – When the promise to deliver some movable property or
assets in lieu of a due sum, the promise is valid is these assets are of smaller
value than the amount due.
2. Payment before due date – Payment of a lesser sum before time, or different
mode or at a different place than appointed in the original contract.
3. Part payment by third party – A part payment made by a third party may be a
good consideration for the discharge of the whole of the debt. In other words
if one party has already accepted a part payment from the third party then he
cannot sue for the balance of the amount.
4. Composition with the creditors – Payment of a lesser amount in satisfaction of
a larger sum where this is done in pursuance of an agreement of compromise
entered into by the debtor with his creditors.

32
33
34

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 5. Promissory Estoppel – This is an equitable estoppel preventing a person from
denying what he asserted earlier. The person making the representation or
promise becomes bound by the same, on the basis of promissory becomes
bound by the same, on the basis of the law of estoppel if another person acted
in faith of the representation. The promise is enforceable at the instance of the
instance of the promisee notwithstanding that there is no consideration for the
promise.35

Indian Law

In India such confusion is not likely to arise, for the Contract Act in Section 63
clearly provides that “every promise may dispense with or remit, wholly or in part,
the performance of the promise made to him, or may extend the time for such
performance, or may accept instead of any satisfaction which he thinks fit.” The
section also provides the following illustrations36:
1. A owes B 5,000 rupees. A pays to B, and B accepts, in satisfaction of the
whole debt, 2,000 rupees paid at the time and place at which 5,000 rupees
were payable. The whole debt is discharged.
2. A owes B 5,000 rupees. C pays to B 1,000 rupees, and B accepts them in
satisfaction of claim on A. this payment is a discharge of the whole claim.
3. A owes B under a contract, a sum of money, the amount of which has not been
ascertained. A, without ascertaining the amount gives to B, and B, in
satisfaction thereof, accepts the sum of 2,000 rupees. This is a discharge of the
whole debt, whatever may be its amount.
4. A owes B 2,000 rupees, and is also indebted to other creditors. A makes an
arrangement with his creditors, including B, to pay them a compensation of
eight annas in a rupee (i.e. 50%) upon their respective demands. Payment to B
of 1,000 rupees is a discharge of B’s demand.

Forbearance to Sue is Consideration

Forbearing i.e. abstaining from enforcing the claim is a good consideration for a
promise to pay or do some other act. 37 Forbearance to sue only constitutes
consideration only so far as the delay in the proceedings is a benefit to the person
intended to be sued. Promise to forbear may be implied and it may be forbearance
only for unspecified time.

Exceptions when the Agreement is Valid without Consideration

English Law
In the English law a contact under seal is enforceable without consideration while the
simple contracts need the presence of consideration. In the words of Anson: “English
law recognizes only two kinds of contract, the contract made by deed that is under
seal, which is called deed or specialty, and the simple contract.” 38 A contract under
seal means which is in writing and which id “signed, sealed and delivered.” The
English law says that there is no liability upon a contract, unless the contract fulfils

35
Moti Lal, etc. Sugar Mills v State of U.P., A.I.R. 1979 S.C. 621, at 643
36
Illustrations (b), (c), (d) & (e) respectively, to Section 63
37
See Morton v Burn, (1837) 7 A.&E. 19; Coles v Pack (1869) L.R. 5 C.P. 65
38
A.G. Guest, Principles of the Law of Contract, 22nd Ed. (1964), p. 65

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on of the two conditions, namely, either that it should be without “consideration’ or
that it is a deed under seal.39

Indian Law
Section 25 of the Indian Contract Act, 1872, generally declares that an agreement
without consideration is void. The Section, however, provides exceptions to the rule
stated as under:

“25. An agreement made without consideration is void unless –

1. It is expressed in writing and registered under the law for the time being in
force for the registration of documents and is made on account of natural love
and affection between parties standing near relation to each other, or unless
2. It is promise to compensate, wholly or in part, a person who has already
voluntarily done something for the promisor, or something which the promisor
who legally compellable to do; or unless
3. It is a promise, made in writing and signed by the person to be charged
therewith, or by his agent generally or specially authorized in that behalf, to
pay wholly or in part a debt of which the creditor might have enforced but for
the law for the limitation of suits.
In any case of these cases, such an agreement is a contract.”

Promise due to natural love and affection

[Section 25(1)]

If a promise is made in favor of a person of a near relation on account of nearness,

love or affection, the same is valid even though there is no consideration. The
following conditions need to be satisfied in order to cover this exception:
1. The parties to the agreement must be standing in a near relationship to each
other.
2. The promise should be made to one party out of natural love and affection for
the other.
3. The promise should be in writing and registered.
The near relationship has not been defined by act or any judicial pronouncement. But,
from the various decisions we can see that it covers blood relations 40 and relations
made through matrimony41, but would not include such relations which are not near,
but remotely entitled to inherit.42 But in a relation where there is no love and affection
the exception does not apply. Like in Rajlucky Dabee v Boothnath Mookerjee, 43 after
a lot of quarrels and disagreements between the parties who were Hindu husband and
wife decided to live apart. Later the husband executed a document giving the wife
separate residence and maintenance. The agreement also included mention of the
quarrels and disagreements between the two. It was held that the document was not
executed because of love and affection but the absence of the same, therefore, the wife
could not recover the sums mentioned in the document. It is also necessary for the
document to be in writing and the writing be registered under the law relating to
registration of documents.

39
Markby’s Elements of Law, 5th Ed., 1896, p. 311
40
41
42
43

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Consideration for Past Voluntary Services
[Section25 (2)]

When something’s done at the desire of the promisor it constitutes a valid

consideration in the same respect a subsequent promise to compensate for whatever
has already been done is also good. In other words promise to pay for a past
voluntary service is binding. In Sindha v Abraham 44 the Bombay High Court said that
“services rendered at the desire of the minor expressed during majority and continued
at the same request after his majority form a good consideration for a subsequent
express promise by him in favor of the person who rendered the services.”

Promise to Pay Time Barred Debt

In another condition if a party agrees to pay a time barred debt it is considered to be

valid contract. Section 25(3) required the following essentials to be satisfied in such a
case:
1. The promise must be to pay wholly or in part a time barred debt, i.e., a debt
which the creditor might have enforced payment but for the law the limitation
of suits.
2. The promise must be in writing and signed by the person to be charged
therewith, or his duly authorized agent.
The English law on the point is also same. It was established in England as way back
as 160145 that a precedent debt is good consideration for a subsequent promise. This
also includes time barred debts.46

Wholly or in Part

Section 25(3) permits a promisee to pay the time barred debt wholly or in part. If the
person promises to pay only a part of the time barred debt then he cone only be made
liable for the part promised and not the whole amount.47

There should be Express Promise

\
The promise to pay a time barred debt must be an express one 48 and cannot be held
sufficient if the intention has to be gathered from large number of circumstances. 49 In
Tulsi Ram v Same Singh50 after three years of expiry period of a promissory note the
defendant made the statement “I accept this pronote and it is valid for the next three
years” (translated to English). Here the Delhi High Court held that the mere
acknowledgment of presence of debt did not give the promise of payment and the
defendant could not be made liable.

Admission to Pay in Court Proceedings

44
(1895) 20 Bom. 755
45
Slad’s case, (1602) 2 Co. Rep. 91a.
46

47
48
49
50

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In State Bank of India v Dilip Chandra Singh Deo 51 it has been held that if the legal
heir of deceased makes an admission in court indicting his willingness to pay the sum
borrowed by the deceased, he can be held liable on the basis of his admission, even
though the recovery for the same is barred by limitation.

Promise to Pay must be Unconditional

Promise to pay time barred debt within the meaning of clause (3) of Section 25must
be expressed and unconditional. In K. Jeyaraman v M/s Sundaram Industries Ltd., 52
the appellant made a formal recognition of the fact that in a document he had agreed
to pay the amount only after receiving the amount from the State Electricity Board. It
was held by the Madras High Court that the document conveyed a conditional
promise and was not covered by Section 23(3) as the cause of action of filing suit
would only arise after amount was received from the State Electricity Board.

Bibliography

Books referred

Singh, Avtar
Contract & Specific Relief, 10th Ed.
51
52

16
Eastern Book Company (Lucknow), 2008

Bangia, R.K.
Law of Contract Part I, 6th Ed.
Allahabad Law Agency (Faridabad), 2009

Kumar, P.N.
Sanjiva Row’s Commentary on The Indian Contract Act, 1872 and Tenders, 10th Ed.
Delhi Law House, 2007

Websites referred

http://en.wikipedia.org/wiki/Currie_v_Misa

http://www.thefreedictionary.com/

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