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Understanding Consideration in Contracts

A contract is enforceable only when supported by consideration, which is the value exchanged between parties. The Indian Contract Act defines consideration as an act or promise made at the desire of the promisor, and it can be provided by the promisee or another person. Valid consideration must be real, can be past, present, or future, and does not need to be adequate in value.

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28 views2 pages

Understanding Consideration in Contracts

A contract is enforceable only when supported by consideration, which is the value exchanged between parties. The Indian Contract Act defines consideration as an act or promise made at the desire of the promisor, and it can be provided by the promisee or another person. Valid consideration must be real, can be past, present, or future, and does not need to be adequate in value.

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Roseanne Park
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We take content rights seriously. If you suspect this is your content, claim it here.
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Quadrant II - Notes

Paper Code: CON 0111


Module Name: Consideration
Module No: 05

A Contract is the result of a promise which is enforceable before the court of law. However,
such promise is of no value when it is not supported by consideration. Consideration is the
price for the promise. Every promise must have something in return. Consideration is some
value received by the promisee.

Example: A promised to sell his motorbike for Rs.25000/- to B. Motorbike is a consideration


for B and Rs. 25000/- is a consideration for A.

Section 2(d) of the Indian Contract Act defines consideration as follows:

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 to do or to abstain from doing
something, such act or abstinence or promise is called a consideration for the promise.

The following are the essential of Valid Consideration

1. At the desire of the Promisor: Consideration must be given only at the desire of the
Promisor. Anything given or did by the Promisee without the request or desire of the
Promisor is not a consideration. Therefore, any voluntary service is not a consideration.
Read the following cases

Durga Prasad v. Baldeo (1880) 3 All 221

Kedar Nath v. Gorie Mohammad 1886 ILR 14 Cal.64

2. By promisee or any other person: As per Indian Contract Act, consideration could be given
by the promisee or any other person on behalf of the promisee. Therefore, as long as
there is a consideration, the contract is valid irrespective of who paid the consideration.

Read Chinnaya v. Ramaya (1882) 4 Mad.137


3. Past, present and future
Under Indian law, consideration can be past, present or future.
4. Consideration must be real.
Consideration must be real, and it cannot be illusionary. Consideration must have some
value in the eye of law.
Read White v. Bluett (1853)23 LJEx 36
5. Need not be adequate: what shall be the consideration is left to the parties. Parties are
free to fix the consideration. Therefore, consideration could be low or high, and the
contract will not be vitiated because of the adequacy of consideration.
Read the following cases

1. De la Bere v. Pearson (1908) 1 KB 280.

2. Radha Rani v. Ramdas AIR 1941Pat.282

3. Ramachandra Chintaman v. Kalu Raju (1878) ILR 2 Bom 362

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