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CONSIDERATION
AUTHORED BY
- RAVINDRAKUMAR BABURAO BHADALE
Roll No.
100
Div - B
Department
Of LLM 1st Year (2nd Sem)
Modern Law
College
Ganeshkhind,
University Circle, Pune
WHAT IS CONSIDERATION?
Consideration means commodity in
exchange. It's an essential element naturally needed in a contract. One of the
introductory ideas underpinning the present day demand of consideration is that
one party to an agreement shouldn't be bound by it if the other party isn’t
also bound. Generally, if an agreement lacks consideration, neither party can
apply it, indeed if it's in jotting.
Stating it appreciatively, the conception of consideration requires that
both parties to a contract shall have given and have entered commodity as the “price”
of their separate pledges. For illustration X pledge to install a home- air
exertion unit for Y, and Y pledges to pay XRs. 1,100 for the job. Then the
price X has entered (in return for his obligation to install the unit) is the
right to a payment of Rs. 1,100 from Y when the job is done; also,
the price Y has entered ( for her pledge
to pay the Rs. 1,100) is her right to have the unit installed. In the notorious English case of Curriev.
Misa, consideration was defined by Lush, J. as follows – ‘ a precious consideration in the sense of the
law may correspond either in some right,
interest, profit or benefit accruing to one party or some forbearance, detriment,
loss or responsibility given, suffered or accepted by the other. ’ The alternate part of this judicial
description is the more important bone as it emphasizes that the consideration
is reflected not so important in profit
for one party but abandonment of some legal right by the other party. It
doesn't count whether the party accepting the consideration has any apparent
benefit thereby or not; it's enough that he accepts it, and that the party
giving it therefore thereby undertakes some burden, or lose commodity which in contemplation of law may
be of value. Section 2( d) of the
Indian Contract Act defines consideration as ‘ When, at the desire of the pledge, the
pledge or any other person has done or abstained, from doing or does or abstains
from doing, or pledges to do or to
hesitate from doing commodity, similar act or abstinence or pledge is called a consideration for the pledge.[1]
ESSENTIAL ELEMENTS OF
CONSIDERATION
The below rudiments of consideration can be developed
as follows
1) Consideration must move at the desire of
the pledge – An act or abstinence
without any request from the pledge is a
voluntary act and doesn't come within the
description of consideration. also an act or abstinence done at the request
of any person other than the pledge
doesn't constitute consideration. In other words an act shall not be a good
consideration unless it's done at the desire of the pledge.
exemplifications A sees B
drowning and saves his life. A can not demand payment for his services as it's
a voluntary act on his part and B
noway asked him to do so. The collector of a quarter asked D to spend some plutocrat on the enhancement of a request and he did so. The shopkeepers of
the request promised to pay commission
to D on their trade. latterly on they
refused to pay the commission. D can not demand payment from the shopkeepers
who are using the request for
having bettered the request as he'd done so at the desire of the
collector and not at the request of shopkeepers – Durgaprasadv. Baldeo( 1880) 3
All. 221. Where a depositor drew a
cheque upon a bank for an quantum bigger
than there was plutocrat to his credit
and the bank paid the quantum of the
cheque because of their own mistake and not because there was any request from
the depositor to recognize his cheque,
it was held that there was no consideration involved and hence the depositor
was under no legal obligation to reimburse the
redundant quantum paid by the
bank – AIR 1958 AP 605( 607) A person
advanced plutocrat to the son on an
undertaking given by the father and
attained Promissory notes( pronotes) for the quantum advanced. When the father failed to
pay the quantum on the pronotes, it was
held that these pronoteswere without consideration inasmuch as the advances
weren't made at the desire of the son who was the pledge under these pronotes – AIR 1948 PC
150( 155)
( 2) Consideration may move from the pledge or any other person – It means that so
long as there's consideration for
pledge, it's immaterial who has furnished it. It may move from the pledge, or from any other person if the pledge has no
expostulation.
exemplifications In marine
insurance, broker’s undertaking to pay
decoration is consideration though it moves from a third person – AIR
1926 Bom. 82( 85) An old lady, by a deed
of gift made over certain property to her son D under the direction that she
should pay her aunt, P( family of the old lady), a certain sum of plutocrat annually. The same day D entered
into an agreement with P to pay her the agreed
quantum. latterly, D refused to pay the
quantum on the plea that no consideration had moved from P toD. Held, P
was entitled to maintain the suit as consideration had moved from old lady,
family of P, to the son D – Chinnayav. Rammaya( 1882) 4 frenetic. 137. Note A consideration moving from third party
who's a minor is no consideration( AIR 1949 Bom. 215( 217)).
3) Consideration is an act, abstinence,
forbearance or detriment – At times consideration is taken as misnomer of plutocrat form of exchange. The legal term
consideration doesn't mean payment of
plutocrat only. The Contract Act says that the consideration can be in
the form of an act, abstinence, forbearance or detriment.
a) Consideration as an act – An act done by a person can constitute
consideration. Where a person executes an undertaking in favour of a bank on
the base of which he receives a substantial benefit of having a current
overdraft account with a bank, the
installation of overdraft account can not be said to be without
consideration – AIR 1953 Tripura 10( 10)
.
b) Consideration as an abstinence – To constitute abstinence as
consideration, one must refrain or promise to refrain from doing commodity that he or she's privileged to do. illustration – X promised to pay his
whoreson Y, a sum ofRs. 50,000 if he'd refrain from drinking, using tobacco,
swearing and playing cards for plutocrat
until he becomes 21 times of age. The whoreson
abstain from all the specified
conditioning as he was requested to do but his uncle failed without making the payment. He claimed
the plutocrat out of the uncle’s estate
as his legal right. Held that, he abandoned his legal right and confined his legal freedom of action upon the
faith of his uncle’s agreement although it may
feel that similar performance
actually didn't prove to be a benefit to the
pledge. similar detriment still
amounted to consideration and he was granted the promised sum ofRs.
50,000.
c) Consideration as forbearance – Forbearance
means anteceding one’s legal right or claim. Creditor abjuring to apply
prosecution and allowing time to pay at the request of the debtor is a
good consideration – AIR 1912 Cal. 67( 69)
exemplifications An agreement to
accept a decree and not to appeal against it when parties to it would have
appealed is one which is supported by good consideration – AIR1969 Bom. 221(
223, 224) A promises to pay C, his
law mate,Rs. 750 if C will give up his
part- time job in a cotillion band for the coming nine months. C lives up
to the terms of the offer, but A refuses to pay. If C brings suit to recovers.
750, A is liable. Then again we've a unilateral contract, pledge in exchange
for a negative act( or a forbearance) – the act of not playing in the band. C’s
refraining constituted both an acceptance of the offer and a legal detriment to
him; therefore we can see that A’s
pledge was supported by consideration.
d) Consideration as detriment – A detriment
suffered by the pledge or any other
person, whether factual or prospective,
can constitute a good consideration. The ordinary contract of guarantee is good
illustration of detriment form of consideration. In consideration of A’s
lending BRs. 1000, C promises to repay the loan if B does not. Then C derives
no benefit, but A suffers detriment by parting with his plutocrat, and this is
enough consideration to support C’s pledge handed A lends the plutocrat at C’s
request. Illustration X, a publisher,
promises Y “If you'll advancers. 5,000 to my whoreson for one time, I'll run
all your announcements during that time at half the regular rate. ” Y makes the
loan, but X refuses to give advertising space at the reducedrate.However, Y
seeks to apply X’s pledge – X is liable, If Y sues X to recover
damages for breach of contract – that is. Y’s act of making the loan to the
whoreson constituted not only an acceptance of X’s offer but a detriment to Y –
the parting with commodity of value
where he wasn't else fairly
obliged to do so. therefore X’s
pledge, supported by consideration, is enforceable against him. Note That it isn't necessary for the pledge to admit any benefit as long as
the pledge or someone differently
suffers a detriment.
4) Consideration can be once,
present or unborn a) once consideration – A once consideration consists in an act formerly done by one as consideration for
a pledge of the other. therefore when a
person promises to compensate another in return for what the ultimate had done for the pledge in the
history or before making of the
pledge, similar pledge is said to be for once consideration, i.e. consideration which
took place in the history. once
consideration is as good as present or
unborn consideration. For
illustration, A does some work for B in the month of April without awaiting any return from B. latterly on, in
June, B promises to pay him some
plutocrat for the work done in April. This constitutes a valid contract
as the work done by A is of the nature of
once consideration. illustration
– “ A ” handed redundant services to B( his master), after
which B promised him a perk for the
same. latterly on B refused to pay the
perk. Held that, if the retainers
put forth redundant work in
consideration whereof a perk is latterly promised to them by the masters,
it's in law a pledge for once services which is good under Indian Law
– AIR 1925 Mad. 192( 194) DB Note Under
the English law, once consideration is
no consideration. But under the Indian Law past consideration is good
consideration because of the use of the words “ has done or abstained from
doing ” in the description of “
consideration ”. b) Present( Executed)
Consideration – The consideration which moves
contemporaneously with the pledge
is present consideration. It consists in “ doing ” or “ abstaining from
doing commodity ”. The stylish illustration of present consideration is
cash trade where performance by both the
parties( dealer and buyer) is contemporaneous.
Another
illustration is a contract of marriage where there's contemporaneous performance by both the
parties. The present consideration is
also known as executed consideration because it emphasizes on the prosecution part of performance. A may offer
B$ 10 if B runs from London to Bath. Indeed though B says that he'll accept A’s
offer, yet until he has run from London to Bath,( i.e. B has performed his part
of contract), there's no consideration for A’s
pledge. B accepts the offer and by running from London to Bath contemporaneously executes the consideration
which makes A’s pledge a list
contract. Note once consideration must
be distinguished from the executed consideration. The consideration( running
from London to Bath) in the below case is executed after the offer or request
and contemporaneously with the
acceptance. But, if A promises B$ 10 in consideration of having run from London
to Bath last week, the consideration is
once. It's commodity wholly done
before the offer or request and before acceptance of the offer. c) Future( Executory) Consideration – A pledge to do
commodity in future is legal consideration. When the consideration from
one party to another is to move at some future date, it's called unborn consideration. The consideration for
A’s pledge to B may be a pledge by B to A. The consideration is also said to beexecutory.However, the pledge made by each is the consideration for
the pledge made by the other, If A pledges to marry B in consideration of B
promising to marryA. exemplifications M and B enter into a contract in April under
the terms of which M agrees to make a
swimming pool for B in June, B promising to payRs. 2,500 in return. M latterly refuses to perform, and B sues him
to recover damages for breach of contract. M is liable; that is, his pledge is enforceable. When the
pledge was given by one of the
mate’s for investing certain
quantum in the cooperation establishment, it was itself consideration
for agreement. also, when similar mate had also accepted liability to bear
losses, that was also consideration for other
mates on the point of bearing loss and as similar it couldn't be said that the
agreement of cooperation was without
consideration – 1986 duty LR 787( 789,790)( DB)( 1986) 157 ITR 537( Guj.).[2]
Rules regarding consideration
In addition to the rudiments of consideration, the other general
rules regarding consideration are as follows
1) Acceptability of consideration –
Consideration, means “ commodity in
return ”. This “ commodity in return ”
need not inescapably be equal in value
to “ commodity given ”. The law simply
provides that a contract should be supported by consideration. So long as
consideration exists, the Courts aren't concerned as to its acceptability, handed it's of some value. The acceptability
of the consideration is for the parties to consider at the time of making the
agreement, not for the Court when it's sought to be executed – Boltonv. Madden( 1873)L.R. 9Q.B.
57. Consideration must, still, be commodity
to which the law attaches value though it need not be equal in value to the pledge made. The Courts don't live to repair bad bargains. To illustrate, X contracts to vend land in MONTANA to Y for$ 6,000. Y latterly discovers that the factual value of the land is$ 3,000. Y is
liable on this pledge to pay$ 6,000,
indeed though what he entered was worth
much lower. Under the usual test, X
incurred a detriment when he promised to convey the land – the rendition of his right to retain the
property. The presence of this detriment constituted a consideration sufficient
to support Y’s pledge to pay; and Y’s
claim of inadequacy is thus of no
applicability. There are exceptions to
the rule that the court won't interrogate into the acceptability of the
consideration. These apply in some contracts made by minors and generally in the
cases where because of a special relationship, one party is suitable to take illegal advantage of another. Though consideration need not be acceptable
to the pledge, yet its inadequacy,
if veritably great, would raise mistrustfulness in the mind of the judge
trying the case, if the other party alleges that his concurrence to the agreement was attained in an unfree manner.
Explanation 2 to section 25 of the
Act says that an agreement to which the
concurrence of the pledge is
freely given isn't void simply because
the consideration is shy; but the
inadequacy of consideration may be taken into account by the court in
determining the question whether the
concurrence of the pledge was
freely given. illustration – A agrees
to vend a house worthRs. forRs. 10,000.
A’s concurrence to agreement was freely
given. The agreement is a contract notwithstanding the inadequacy of the
consideration. still, if A says that his
concurrence wasn't freely given, the inadequacy of the consideration is
a fact which the Court should take into account in considering whether or not
A’s concurrence was freely given.
2) It must have some value in the
eyes of law – A precious consideration
may correspond either in some right,
interest or property accruing to one party or some loss or responsibility
suffered or accepted by the other. also, consideration must be certain. A pledge to give a reasonable sum in return for
a service can not be executed on the
grounds of query. Although the court won't interrogate into
the acceptability of the consideration, there are certain acts and pledges which, for reasons of policy,
are supposed to be of no value in the
eye of law and which are, thus, an inadequate consideration. A pledge to do any act, or forbearance from
doing any act, which the pledge might
lawfully do, is generally a sufficient consideration; but the law regards
some pledges as void and, if a pledge is void, it's a nullity, it isn't a
sufficient consideration for a counter
pledge. illustration – In the
case of Whitev. Bluett 1853, the pledge
by a father to release his son from an outstanding loan, if the ultimate
abstain from boring the father
with complaints, was refused to be
executed, since the essential
rudiments of a bargain was lacking. The court observed that,
Conclusion
Enforcing
any legal contract requires it to have an element of consideration included in
it. In simple words, it is nothing but a price that the promise agrees to pay
to the promisor. Now, this price can be paid as a benefit to the promisor
and/or a loss or detriment to the promise.
Only
the promises that are backed by consideration are enforceable because any
promise made without any obligation is usually very rash and without any sort
of deliberation. The reason for making consideration an essential part of a
contract is because it levies a sort of burden on the parties to fulfil the
terms of the contract. For Example, if, A promises to give B a car without B
doing or abstaining to do anything for it, makes the promise by an
unenforceable. This will be a gift and not a contract per se.
References
1. The
Indian Contract Act, 1872. Asiapedia.
Dezan Shira and Associates.
2. The
Indian Contract Act of 1872, No SIM card to Minors. telecomtariff.in.
3. Pandia – Principles of Mercantile Law, 8th edition,
by Ramkrishna R.Vyas.
4. Avtar. Singh Textbook on Law of Contract and Specific Relief (2016 ed.).
Eastern Book Company. p. 488. ISBN 9789351453482.
5. Explore
Economies.
6. Pollock & Mulla, The Indian Contract & Specific Relief Acts,
LexisNexis
[1] Available at https://www.toppr.com/guides/business-laws/indian-contract-act-1872-part-i/legal-rules-regarding-consideration/ last seen on 21/4/2024
Article Information
CONSIDERATION
Authors: RAVINDRAKUMAR BABURAO BHADALE
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/04/24
- Issue 7
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