LAW OF CONTRACT

“CONSIDERATION MOVING FROM THIRD PERSON”

CASE : Chinnaya vs. Ramayya

Submitted to: Submitted By:

Mr. Anurag K. Srivastava Yogesh Baranwal
Assistant Lecturer L.L.B. 1yr
Faculty of Law 1st Semester
Lucknow University, Lucknow Lucknow University, Lucknow
 Introduction to Consideration
Consideration is the price given for something which was promised.
Central function of the doctrine of consideration is to prevent people from making
gratuitous promises, purpose of law is to distinguish between gratuitous and non-
gratuitous promises. Other function is may be ignoring risk arising out of non
performances.
According to Blackstone, Consideration is the recompense given by the party
contracting to the other. Various Authors have defined in the different forms.
According to Sir Frederick Pollock:
“consideration is the price for which the promise of the other is bought and the
promise thus given for value is enforceable”

According to Patterson, Consideration means something which is of some value in the

eye of law…It may some benefit to Plaintiff and some detriment to the defendant.
The definition of consideration as a “price of the Promise” was given by Cheshire
and Fifoot.
Under Indian Contract Act 1872, Consideration is one of the essential given under
S.10. S.25 states that every contract without consideration shall be void. The
definition of consideration is given under S.2 (d), According to which

”When at the desire of the promisor, the promise or any other person has done or
abstained from doing, or does or abstains from doing or promises to do or abstain
from doing, something, such act or abstinence or promise is called a consideration for
the promise.”

The definition of the consideration requires three things, first that the act or
abstinence, which is to be consideration for the promise, should be done at the desire
of the promisor, secondly, that it should be done at the desire of the promise or any
other person and finally that the act or abstinence may have been already executed or
is in the process of being done or may be still executor, means it is promised to be
done.
For the first part of consideration there is a clear rule that the consideration must be at
the desire of the promisor, but the complicity arises in the second part when it states
that the promisee or any other person means that under Indian Contract Act it is not
must unlike English Law that Consideration must be given by the promise himself or
herself.

Here we are concerned with this second part of consideration’s definition. We are
concerned here about the Role of third party in the consideration. That whether any
person other than promisee can give the consideration? If any person other than
Promisee gives the consideration whether he has the right to sue promisor in case of
non performance. So what will be the status of the third party who gave the
consideration? Before discussing this all it is must to know about the general rule of
privity of contract and privity of consideration.

Definitions of Consideration under Section 2(d)

Section 2 (d), The Indian Contract Act, 1872 defines consideration as given under:

“When, at the desire of the promisor, the promise or any other person has done
or abstained from doing, or does or abstains from doing or promises to do or abstain
from doing something, such act or abstinence or promise is called a consideration for
the promise.”

a) Has done or abstained from doing, or

b) Does or abstains from doing, or
c) Promises to do or to abstain from doing, something.
d)
There should be some act, abstinence or promise by the promisee, which constit
e) Has done or abstained from doing, or
f) Does or abstains from doing, or
g) Promises to do or to abstain from doing, something.

There should be some act, abstinence or promise by the promisee, which constit

Essentials of Consideration
The definition of consideration highlights the following essentials to be fulfilled for
the presence of a valid consideration:

 Consideration to be given “at the desire of the promisor”

 Consideration may be past, present or future, in so far as definition says that the
promisee:
h) Has done or abstained from doing, or
i) Does or abstains from doing, or
j) Promises to do or to abstain from doing, something.
 There should be some act, abstinence or promise by the promisee, which
constitutes consideration for the promise.
 Consideration to be given “by the promise or an other person”

These essentials have been discussed in detail in this below :-

Consideration at the Desire of the Promisor

The definition of consideration under section 2(d) clearly emphasizes that the
consideration must be given at the desire of the promisor, rather than merely
voluntary or at the instance of some third party.
Discuss in Case: Durga Parsad v Baldeo:1

Consideration may be Past, Present or Future (Executory)

Section 2(d) of the Indian Contract Act, 1872, recognizes three types of consideration,
namely, Past, Executed and Executory. It says that when at the desire of the promisor,
the promisee or any other person:

1. Has done or abstained from doing, (the consideration is Past.)

2. Does or abstains from doing, (the consideration is Executed or present.)
3. Promises to do or abstain from doing, (the consideration is Executory or
future.)

Consideration by Promisee or any other Person

According to the Indian Law, consideration may be given by ‘the promisee or any
other person’. It means that as long as there is a consideration for a promise, it is
immaterial who has furnished it. It may move from the promisee, or, if the promisor
has no objection, from any other person. But in English Law the position is different,
here the consideration must move from the promisee himself. For example, A
promises to give his watch to B and a consideration of Rs.5000 for the same is given
to A by C and not B himself. This will not be a valid contract in England but in India
it will be valid as the section 2(h) clearly states that “…at the desire of the promisor,
the promisee or any other person” may provide consideration. This can be further
understood in the case of Chinnaya v Ramaya. In this case A, an old lady granted her
estate to her daughter (the defendant) with a direction that the daughter should pay an

1
annuity of Rs.653, to A’s brothers (the plaintiffs). On the same day, the defendants
made a promise with the plaintiffs that she would pay the annuity as directed by A.
The defendant failed to pay the stipulated sum. In an action against her by the
plaintiffs she contended that since the plaintiffs themselves had furnished no
consideration, they had no right of action. The Madras High Court held that in this
agreement the consideration had been furnished by the defendant’s mother and that it
was enough consideration to enforce the promise between the plaintiff and the
defendant.
In the above case it can be seen that A enters in a contract with B, but A himself has
not given any consideration to B, but the consideration has been provided by third
party i.e. C to B. Although A is a stranger to consideration, he can still enforce the
contract against B. One has to remember that this is only true under Indian Law and
the situation is different under English Law where the consideration can only move
from the promisee and a stranger to the consideration in no condition can maintain
any action.

In Court :
Brief : As per section 2(d) of the Indian Contract Act (1872), “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 abstain from doing, something, such
act or abstinence or promise is called a consideration for the promise. From this
definition, it is clear that in a valid contract the consideration need not flow from the
promisee only. It could flow from any other person who is not a party to such contract
thus, the decision was in favour as this was a valid consideration.

Citation : Chinnaya vs Ramaya

Facts:
A lady transferred her property to her daughter (defendant), by a deed of gift. Such
deed was registered. One of the terms of the gift deed was that the daughter would
pay a sum of Rs. 653/- every year to the lady’s sister (plaintiff). The defendant
executed an agreement in favour of the plaintiff promising to do the same. The
defendant failed to pay the annual amount to the plaintiff. Hence, the plaintiff sued the
defendant for the recovery of the same.
Issue:
Whether the plaintiff can bring an action against the defendant for the amount
promised in a contract where the consideration for such promise has been furnished
by the mother of the defendant (plaintiff’s sister)? Plaintiff’s contention The
consideration for the defendant’s mother to gift the property to the defendant was
defendant’s promise to pay an annuity to the plaintiff. Hence, the plaintiff is entitled
to sue the defendant to recover the same. Defendant’s contention The plaintiff had not
furnished any consideration under the contract. Hence, she is not entitled to sue the
defendant for the recovery of the amount promised to her.

Bibliography

Singh, Avtar
Contract & Specific Relief, 10th Ed.
Eastern Book Company (Lucknow), 2008

Bangia, R.K.
Law of Contract Part I, 6th Ed.
Allahabad Law Agency (Faridabad), 2009

Furmston, Michael
Cheshire, Fifoot & Furmston’s Law of Contract, 14th Ed.
Lexis Nexis Butterwoths, 2006

Websites referred

http://en.wikipedia.org/wiki/Currie_v_Misa

http://www.thefreedictionary.com/

https://www.lawyersclubindia.com/judiciary/case-chinnaya-vs-ramaya-
4312.asp#:~:text=Case%3A%20Chinnaya%20vs%20Ramaya%20Facts%3A%20A
%20lady%20transferred,a%20deed%20of%20gift.%20Such%20deed%20was
%20registered
 CONCULISON

In Indian Law, Consideration may be given by the promise of on any

other persons. In India, there is a possibility that concideration for the
promise may move, not from the promise but a thired persons, who is not
a party to the contract, which is different form the English Law in which
the consideration must move from the promise.

From this case we can conclude that :

 The consideration should pass on promisor as per his/ her own

wishes.
 The consideration may pass on to the promisor from the promisee or
any other thired person. It is not necessary that the promisor him-self /
her-self should benefited by the consideration as furnished by the
promisee.
 Consideration can be Past, Present & Future.
 Consideration need not be adequate.
 Consideration must be lawful.