CONSIDERATION

 Section 2 (d)
 Definition-
 When
 At the desire of the promisor,
 Promisee or any other person
 Has done or abstained or, does or abstains
or promises to do or to abstain from doing
 Something
 Such act, abstinence or promise is called
consideration for the promise.
Every Contract consists of two parts:
 promise and
 consideration for the promise.

Promises are often made in return for a

promise, for example, a buyer purchases
the goods for a price. Price for the
promise is consideration here. Promise
for a promise in return is 'consideration'
 RULES RELATING TO
CONSIDERATION
 Consideration must move at the desire of the
promisor.
 Consideration may move from the promisee or
any other person.
 Consideration may be past, present or future.
 Consideration may be an act of doing or
abstaining from doing something or it may be
an act of forbearance or abstinence.
 Consideration need not be adequate.
 Consideration must be real and not illusionary.
 Consideration must not be unlawful, illegal,
immoral or opposed to public policy.
 Importance of Consideration
 According to Section 25 an agreement
without consideration is void

 Exceptions:
1. Agreement made on account of natural
love and affection.[Section 25(1)]
2. Promise to compensate for past voluntary
services. [Section 25(2)]
3. Promise to pay a time-barred debt.
[Section 25(3)]
 CARLILL
V/S
CARBOLIC SMOKE BALL CO.
 FACTS
The defendant company manufactured a drug called
‘smoke balls’ and claimed it to be anti-influenza.
It published an ad in newspapers saying that any
person who consumes smoke balls 3 times a day for 2
weeks and yet being attacked by influenza will get a
reward of pounds 100.
Mrs. Carlill consumed smoke balls as directed but
unfortunately got an attack of influenza. She,
therefore, claimed the reward from the company.
The company refused.
 ?
 1. Is the advertisement an offer or an invitation
to offer?
 2. If it is an offer, who is the offeree? Can the
offer be made to the whole world at large?
 3. Is the offer too vague to materialise into a
valid contract?
 4. Was there any communication of acceptance
from Mrs. Carlill?
 5. What was the consideration from Mrs. Carlill?
 ESSENTIALS OF A VALID
CONTRACT
SECTION 10
 All agreements are contracts if they

are made
 with free consent

 of parties competent to contract

 for a lawful object and lawful

consideration; and
 are not expressly declared to be void
 PARTIES COMPETENT TO CONTRACT
 SECTION 11, 12
 Persons who are majors
 (persons who have completed 18 years of age), and
 Persons of sound mind
 A person is said to be of sound mind for the purpose of making a
contract, when he is capable of understanding it and forming a rational
judgement as to the effects of the contract upon him.

 EXPLANATION

 1. A person usually of sound mind but occasionally of unsound

mind, cannot make a contract when he is of unsound mind.
CONSENT
 SECTION 13
 Two persons are said to consent each other when
they agree upon the same thing in the same
manner.

FREE CONSENT
 SECTION 14
 A consent is said to be free when it is not caused by -
1. coercion

2. undue influence

3. Fraud

4. Misrepresentation

5. Mistake

THANK YOU