Consideration

Learning Objectives

Meaning of consideration
Importance of consideration
Types of consideration
Rules for consideration
Contract without consideration

Meaning
Quid pro quo (something in return)
According to Pollock, Consideration is the
price for which the promise of the other is
bought, and the promise thus given for the
value is enforceable.
A agrees to sell his car to B for Rs. 50,000;
Rs. 50,000 is consideration for A and Car is
consideration for B

Importance
No consideration no
Contract
Contract without
consideration are
purely gratuitous
(Unwanted ) in
nature

Types of Consideration
Executed or present Consideration:
When the consideration is given simultaneously with
promise. (Mr. A receives Rs. 5,000 in return for which he
promises to deliver certain goods to B.)
Executory or future Consideration:
When consideration by one party to another will be given
in future.
Past Consideration:
The consideration for the present promise was given in the
past (Mr. A promises to pay Rs. 50,000 to Mr. B for the
services given one month ago)
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Rules for consideration

1. It must move at the desire of the promisor
(A saved Bs son without being ask to do so .)
B spent some money on the improvement of a
market at the desire of the collector of the
district .In consideration of this D who was
using the market promised to pay some
money to B
Held the agreement was void being without
consideration as it had not moved at the
desire of D
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2. It may move from the promisee or any other

person
[ Case :Chinnayya v.Ramayya ]
An old lady , by a deed of gift ,made over a certain
property to her daughter D, under the direction that
she should pay her aunt ,P ( sister of the old lady) ,a
certain sum of money annually. The same day D
entered into an agreement with P to pay her the
agreed amount .Later D refused to pay the amount
on the ple that no consideration had moved from P
to D.Held P was entitled to maintain suit as
consideration had moved from the old lady ,Sister of
P to the daughter D

3. It may be past, present or future

A receives Rs 5,000 in return for which he promises to

deliver certain goods to B. The money A receives is
the present consideration for the promise he make to
deliver the goods

4. It need not be adequate

It is not necessary that the consideration
should be equal to the value of something
given
Example:
I agree to sell my 2006 BMW 525 to Alex for Rs
2,00,000.
The consideration is Rs 200000 in exchange for
the BMW
The court will not look at whether the value is
enough; and the consideration is sufficient
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5. It must be real and not illusory:

Following considerations are not real.
(a)Physical impossibility
(A promises to put life into Bs Dead body )
b) Uncertain consideration : Any promise
to pay reasonable amount but no method
c) Illusory consideration

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6. It must not be illegal, immoral or

opposed to public policy.
Example: A promises to obtain employment
for B in the public service and in return B
promises to pay Rs 50,000

 7) It must be something which the

promisor is not bound to do

Exceptions to the Rule No Consideration No

Contract
1. Natural love and affection:
[Case: Venkatswamy v. Rangaswamy ]
An elder brother, on account of natural love and
affection, promised to pay the debts of his
younger brother.
The agreement was put to writing and was
registered.
Held : The agreement was valid

[Case: Raihikhy Dohee v. Bhootnath]

A Hindu husband by a registered
document, after referring to quarrels and
disagreements between himself and his
wife, promised to pay his wife a sum of
money for her maintenance and separate
residence.
Held the agreement was void

2. Compensation for
services rendered
voluntarily
(i) Act must have been done
voluntarily
(ii)For the benefit of the
promisor
(iii)The promisor must now
agree to compensate the
promisee

 A says to B At the risk of your life you

saved me from a serious accident .I
promise to pay you Rs 10,000, hence
there is a contract between A and B

3) Completed Gift
4) Agency
5) Promise to pay a time barred debt
(Limitation act after 3 years time )

 A agrees for a sum of Rs 5,00,000 to

construct for B a building , according to
the specifications .When A has completed
half of the work he threatens to quit the
work unless B agrees to pay Rs 50,000 . B
so promises . A completes the work and
asks for additional sum . Will A get the
additional sum ??? Decide

THANK YOU

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