Law of contract, lecture-5

Consideration

Subject to certain exceptions; an agreement is not enforceable unless each party to

the agreement gets something. This "something" is called consideration.

Section 2(d) of the Contract Act defines- "When, at the desire of the promisor, the
promisee or any other person has done or abstained (from doing something, such
act or abstinence or promise is called a consideration for the promise."

Example: P agrees to sell a house to Q for Tk. 80.000. For P’s promise, the
consideration is Tk. 80OOO, and for Q's promise, the consideration is the house.

Types of consideration:

1. Past consideration:

When the consideration of one party was given before the date of the promise, it is
said to be past.

Example Suppose that X does some work for Y in the month of January (without
expecting any payment). In February Y promises to pay him some money‘. The
consideration of X is past consideration.

2. Present consideration:

Consideration which moves simultaneously with the promise is called Present

Consideration or Executed Consideration.

Example B buys an article from a shop and pays the price immediately. The
consideration moving from B is present or executed consideration.

3. Future consideration:

When the consideration is to move at a future date, it is called Future

Consideration or executory consideration. In a contract the consideration may be
executory on both sides.

Example a promise to pay money at a future date for goods to be delivered at a

future date is a valid contract.
 Legal rules regarding consideration:

► 1. Desire (or request) of the promisor is essential.

► 2. It may move from the promise or any other person.

► 3. It may be past, present or future.

► 4. Consideration need not be adequate.

► 5. Consideration must be real

► 6. It must not be illegal, immoral or opposed to public policy.

1. Desire (or request) of the promisor is essential:

The act done or loss suffered by the promisee must have been done or
suffered at the desire of the promisor. An act done without any request is a
voluntary act and does not come within the definition of consideration.
Example: A saves B’s goods from fire without being asked to do so. A
cannot demand payment for his services from B.

2. Consideration may move from the promisee or from any other person:
Consideration may move from promisee or any other person, i.e., even a
stranger. This means that as long as there is consideration for a promise it is
immaterial who has furnished it
Example A bought a bike from his friend B. On behalf of A’s promise, if his
father pay the money to B (the seller of a bike) it is valid consideration.

3. The consideration may be present, past, or future:

Consideration may be classified into three categories– Past, present and
future as discussed in previous topic.

4. Consideration need not be adequate:

An agreement to which the consent of the party is freely given is not void
merely because the consideration is inadequate; but the inadequacy of the
 consideration may be taken into account by the court in determining the
question “whether the consent of the promisor was freely given or not.

5. Consideration must be real:

The consideration must have some value in the eye of law. It must not be
sham or illusory. The impossible· acts and illusory or non-existing goods
cannot support a contract. Therefore, real consideration comes from good
consideration.
Example a) illusory consideration: G promises for no consideration, to give
H Tk. 1,000. This is a void agreement. No consideration, no contract.
(b) Impossible act: X promises to supply Y one tola of gold brought from the
sun. The consideration is sham and illusory and there is no contract.

6. The consideration must not be illegal, immoral, or opposed to public

policy:

If either the consideration of the object of the agreement is illegal, the agreement
cannot be enforced. The same principle applies if the consideration is immoral or
opposed to public policy.