Consideration is one of the essential elements of contract. Consideration can be defined as something in return. It can be called a recompense. That is the party's to the contract must get something in return out of it. The definition of offer has the words "to do or to abstain from doing". This doing or abstaining from doing amounts to consideration. If there is no consideration then there is no contract(there are exceptions to this which would be discussed later).
1)Adequacy : Consideration need not be adequate. It should be something in return. By adequate we mean that it should be adequate to the value of the thing received. But this adequacy is not a must. Eg:A agrees to pay 500 for a horse valued at 1000. Here the consideration is not adequate but there is consideration. Whats more important is that there should be some consideration and it need not be adequate.
2)Consideration must move at the behalf of the promisor: The consideration given should always move at the behest of the promisor.That is consideration must be given at the instruction of the promisor , if consideration is given according to the instructions of a third party then the promisor is not bound by it.
3)Consideration may be past,present or future :
Past consideration : Consideration to be paid for past acts it called past consideration. It is a consideration for what has already happened.
Present consideration : Consideration payable for what is being done currently is called as present consideration. It is a consideration paid for what is currently happening.
Future consideration : Consideration that is payable for future acts is called as future consideration. It is a consideration payable for something that will be done in the future.
4)Consideration may be given by promisee or anyother person: In India it is not a must that only the promisee must give consideration, consideration can be given by a third party also.
5)Forbearance to sue amounts to consideration: A person who has agreed to not to sue is said to give a good consideration.
6)Consideration must be legal - The consideration given must be legal and not illegal. If the consideration given is illegal then the contract becomes void as legality of consideration is an essential.
7)Consideration must be real and competent- This means that consideration should not be something illusionary and should be real, that is what exists and what is capable of being performed.
8)Consideration should not be something that promisor is already bound to do - There are certain things that a promisor is already bound to do and this does not amount to a good consideration. Eg: A contracts with B to deliver the goods by 9 am . Here A delivering the goods by 9 am is not a consideration as he is already bound to that.
Exceptions to no consideration no contract:
1)Past voluntary service: Any person who has come forward voluntarily in the past to do a service need not do it for a consideration and if the person receiving such service promises to pay ,then he is bound to pay he cannot breach the promise. Eg: A is a sick person and not able to look after his faily, B comes forward voluntarily and buys them all the necessaries. A promises to pay B later. Here A is bound by the promise though B has done it for no consideration at all.
2)Love and affection : When a person gives something to another out of love and affection for this there is no necessity of a consideration. Such agreement has to be in writing and has to be registered. eg: A agrees to pay his son B 1000 rupees in writing and gets it registered.
3)Agreement to pay a time barred debt: Any one who has agreed to pay debt under the limitations act need not do it for consideration. Any debt incurred by a person has to be repaid when it is due, if the debtor fail then it results in breach of promise. In this case the creditor as an aggrieved party can insist on performance by approaching the court of law. Law allows him three years to take any action. Otherwise the debt would be treated as a time barred debt as per the limitations act and he will not be able to recover it later.
4)As per Indian contract act there is no need for any consideration to start any agency.
5)There is no requirement of any consideration for any gift actually made. There need not be any nearness between the parties, even if there is any nearness there need not be any love and affection.
Features of consideration:
1)Adequacy : Consideration need not be adequate. It should be something in return. By adequate we mean that it should be adequate to the value of the thing received. But this adequacy is not a must. Eg:A agrees to pay 500 for a horse valued at 1000. Here the consideration is not adequate but there is consideration. Whats more important is that there should be some consideration and it need not be adequate.
2)Consideration must move at the behalf of the promisor: The consideration given should always move at the behest of the promisor.That is consideration must be given at the instruction of the promisor , if consideration is given according to the instructions of a third party then the promisor is not bound by it.
3)Consideration may be past,present or future :
Past consideration : Consideration to be paid for past acts it called past consideration. It is a consideration for what has already happened.
Present consideration : Consideration payable for what is being done currently is called as present consideration. It is a consideration paid for what is currently happening.
Future consideration : Consideration that is payable for future acts is called as future consideration. It is a consideration payable for something that will be done in the future.
4)Consideration may be given by promisee or anyother person: In India it is not a must that only the promisee must give consideration, consideration can be given by a third party also.
5)Forbearance to sue amounts to consideration: A person who has agreed to not to sue is said to give a good consideration.
6)Consideration must be legal - The consideration given must be legal and not illegal. If the consideration given is illegal then the contract becomes void as legality of consideration is an essential.
7)Consideration must be real and competent- This means that consideration should not be something illusionary and should be real, that is what exists and what is capable of being performed.
8)Consideration should not be something that promisor is already bound to do - There are certain things that a promisor is already bound to do and this does not amount to a good consideration. Eg: A contracts with B to deliver the goods by 9 am . Here A delivering the goods by 9 am is not a consideration as he is already bound to that.
Exceptions to no consideration no contract:
1)Past voluntary service: Any person who has come forward voluntarily in the past to do a service need not do it for a consideration and if the person receiving such service promises to pay ,then he is bound to pay he cannot breach the promise. Eg: A is a sick person and not able to look after his faily, B comes forward voluntarily and buys them all the necessaries. A promises to pay B later. Here A is bound by the promise though B has done it for no consideration at all.
2)Love and affection : When a person gives something to another out of love and affection for this there is no necessity of a consideration. Such agreement has to be in writing and has to be registered. eg: A agrees to pay his son B 1000 rupees in writing and gets it registered.
3)Agreement to pay a time barred debt: Any one who has agreed to pay debt under the limitations act need not do it for consideration. Any debt incurred by a person has to be repaid when it is due, if the debtor fail then it results in breach of promise. In this case the creditor as an aggrieved party can insist on performance by approaching the court of law. Law allows him three years to take any action. Otherwise the debt would be treated as a time barred debt as per the limitations act and he will not be able to recover it later.
4)As per Indian contract act there is no need for any consideration to start any agency.
5)There is no requirement of any consideration for any gift actually made. There need not be any nearness between the parties, even if there is any nearness there need not be any love and affection.
No comments:
Post a Comment