BUSINESS LAW NOTES- 2

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:

(i) promise and
(ii) 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

1. Consideration must move at the desire of the promisor.

2. Consideration may move from the promisee or any other person.
3. Consideration may be past, present or future.
4. Consideration may be an act of doing or abstaining from doing
something or it may be an act of forbearance or abstinence.
5. Consideration need not be adequate.
6. Consideration must be real and not illusionary.
7. 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)]