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CONTRACTS SEM 2 TEE Consideration Under The Indian Contract Act Kedar Nath V Gorie Mohammed Rajveer Sharma 81012019119
CONTRACTS SEM 2 TEE Consideration Under The Indian Contract Act Kedar Nath V Gorie Mohammed Rajveer Sharma 81012019119
NAVI MUMBAI
TOPIC-Consideration under Indian Contract act- study with special reference to Kedar nath
v Gorie Mohammed
SAP ID-81012019119
ROLL NO – B133
(2020-2021)
DECLARATION
I , Rajveer Sharma , hereby honestly that the work reported in this project report entitled
“Consideration under Indian Contract act- study with special reference to Kedar nath v Gorie
Mohammed ” which is submitted on 3rd august2021 , to Professor Megha ojha , has been
completed and submitted by me . I have duly acknowledged all the varied sources from
where the various ideas and extracts have been adopted from. To my best knowledge the
project is free from any plagiarism issue.
ACKNOWLEDGEMENT
I would sincerely like to thank our Dean, Dr. Saurabh Chaturvedi, and our professor for
the subject of Law of contracts , Miss. Megha Ojha for giving us this fantastic opportunity
for research that have helped us understand of the intricacies and nuances in the field of
research. It has been an absolutely wonderful learning experience. I would also like to extend
my gratitude toward Professor Megha ma’am, without whose guidance this paper could not
have been completed. I would also like to thank my parents for being supportive throughout.
TABLE OF CONTENT
1. Abstract
2. Research objectives
3. Research questions
4. Research Methodology
5. Consideration under the Indian contract act
6. Contract and consideration inter relation
7. Promise
8. Bargain
9. Reliance
10. Facts of the case
11. Issues
12. Verdict of the court
13. Legal principles involved in the case
14. Significant case laws on the principle
15. Conclusion
16. Bibliography
ABSTRACT
The requirement of consideration has been a subject of intense scrutiny by contract law
scholars, judges, and practitioners alike. Some have argued that consideration does not form
the essence of contract law and must be abolished. This debate has entered the Indian contract
law jurisprudence and the dominant conception of consideration in the Indian contract law
(that its position in the Indian law is the same as common law) has been called into question.
It has been argued that that the definition of consideration in the Indian Contract Act, 1872 is
a step away from the traditional common law conception of consideration as something
which can be measured in terms of money or money’s worth (objective conception) and is
wide enough to cover subjectively manifested promises. In this paper, I argue that
consideration under the Indian Contract Act was never meant to cover subjectively
manifested promises. Furthermore, the consideration requirement helps to build a distinct
kind of relationship between parties to an agreement that justifies its continued existence.
With this background, I explain the substantive features of the consideration requirement
under the Indian Contract Act, 1872.
At that time, the investigation is, regardless of whether it is a demand that could be
maintained by all the people who were put at risk to the temporary worker in case they were
totally united. Obviously, there are a considerable number of memberships that cannot be
recovered. A man for unknown or different reasons inscribes his name to be a member of
some charitable article, for example, but the extent of his membership cannot be recovered
from him in light of the fact that there is no thought.
He approached people to buy, knowing the reason why the money should be connected, and
they realized that, with the confidence of their membership, they had to acquire a
commitment to pay the contractual worker for the job. Under these conditions, this type of
agreement arises.
Research objectives –
1. Briefing about the Case.
2. Brief about the facts of the case.
3. Brief about the verdict of the court.
4. Advance judgements.
5. Analyse the case and its repercussions.
Research questions –
1. Explain the varied facts of the case?
2. Explain the various legal principles involved in the case?
3. Explain the significant case laws involved in the principle?
4. Briefly describe the verdict of the case and the various advance judgements in
inclusion?
5. Explain how consideration is a crucial aspect in contract creation?
RESEARCH METHODOLOGY
My approach was multi-disciplinary, and I have considered information from a wide range of
sources that have overlapped to cultivate my perspective. While most do not secure a direct
place in this paper, their influence is nevertheless not far from the surface. The disciplines I
have consulted in my research are as follows: anthropology, behavioural science,
demography, ethics, law, religion, political science, psychology, sociology, and geographical
divisional studies. The sources I consulted were obtained from scholarly, religious, and
popular texts and articles, the Internet, Indian news, but also international news media. Since
one of my goals was to focus on the case study of Kedar nath v Gorie Mohammed and
various ideologies involved in all of these sources contributed to my understanding in some
way.
("The Act") settles on agreements not upheld by thought unenforceable. Throughout the long
term, the necessity of thought has been a subject of extraordinary examination by contract
law researchers, judges, and specialists the same. Some have contended that thought doesn't
frame the embodiment of contract law and should be abrogated. Others have called attention
to the legitimate incoherencies in the utilization of the thought prerequisite by the courts also,
consequently required its nullification. A few researchers contended from a hypothetical
point of view by propounding a hypothesis of contract and dissecting the thought necessity to
see whether it fits a specific hypothetical model of contract law overall.
Then again, there have additionally been some influential avocations of the thought
prerequisite. This discussion on the thought prerequisite has as of late went into the Indian
contract law circle when the predominant origination (that its situation in the Indian law is
equivalent to precedent-based law) of thought in the Indian contract law has been raised
doubt about. It has been contended that that the meaning of thought in the Indian Contract
Act, 1872 is a stage away from the conventional Common Law origination of thought also, is
sufficiently wide to cover abstractly showed guarantees; subsequently, it was "intended to
check the evaporating point of thought without having to officially abrogate it.2
" Moreover, it has been contended that the understanding by the courts and legitimate
researchers in India deciphered the definition agreeably with the Common law origination of
thought in this way 'overshadowing' the advancement of drafters of the Indian Contract Act
with 'universality'. Here, the methodology taken by the courts has been tested and censured
utilizing fundamentally the language of the Act. Thus, to answer this analysis, we should take
a gander at the language of the Act. 3
1
The Indian Contract Act 9 of 1872 (1872)
2
Section 25 of the Act carves out certain exceptions to the rule that consideration is a necessary requirement for
an enforceable contract.
3
Lord Wright, Ought the Doctrine of Consideration to be Abolished from the Common Law?, 49 HARV. L.
REV. 1225 (1936).
1. PROMISE
With regards to promissory hypothesis, the origination of thought is opposing in light
of the fact that the prerequisite of thought needs there to be an trade, however the law
isn't keen on the sufficiency of thought. The fundamental suspicion here is that
opportunity to contract is conflicting of contract as a trade. Thought doesn't give a
meaningful explanation to authorize guarantees; the justification implementation
comes from the very reality for guarantee itself. In the event that the guarantee is
made without an aim by the party to tie itself, then, at that point any such articulation
isn't a guarantee in the severe sense. Other purposes behind not upholding a guarantee
incorporate lawlessness, pressure, unjustifiable deals, and so on consequently, the two
purposes behind implementing and not-upholding guarantees do not need thought.
Thusly, the necessity of thought becomes superfluous in promissory hypothesis.
2. BARGAIN POLICY
3. RELIANCE
Dependence and reliance hypothesis depends on the reason that if promisor (called as
'provider' in certain works), because of her guarantee, prompts a promisee ('beneficiary') to
depend on that guarantee and experience an impairment, the promisor should repay the
promisee for the misfortune because of that reliance.56 In this sense, the promisor accepts an
accountability to respect the provisions of the arrangement went into between the gatherings.
Henceforth, the necessity of thought isn't rigorously fundamental in such a plan of
agreements.
Further in the paper there has been a significant case study about the very dignified case
Kedar Nath V Gorie Mohammed 1886.
Thereafter, with the increase in subscriptions and schemes, construction costs rose from to Rs
40,000 that was initially 20,000. The defendant subscribed to the building of the town hall for
Rs 100. But since he started to decline for paying the agreed sum. The complainant has
initiated a lawsuit to collect the payment.5
4
Soujany, Kedarnath Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji v. Gorie Mahomed –
IJOSLCA (ISSN : 2582-872X)
5
Kedarnath Bhattacharji v. Gorie Mahomed (1886) 7 I.D. 64 Cal. | One Stop destination for DU LLB students
(wordpress.com) and Soujany, Kedarnath Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji
v. Gorie Mahomed – IJOSLCA (ISSN : 2582-872X)
II. ISSUES:
That whether the suit filed by the plaintiff for his own and other parties’ interest
maintainable?
That whether the defendant was responsible for paying the sum of money?6
Nevertheless, in this specific case the subscribers were aware of the object to which the funds
was allocated and that the plaintiff decided to enter into an agreement on the basis of their
subscription. The Courts held this a completely legal and well-thought contract.
The Court held that the defendant is obligated to pay the sum even if he does not make the
pledge for a charitable purpose. He was in charge of his promise. A vow that was once
made cannot be revoked back after its inception. He reiterated the rule of law by declaring
"any conduct done in accordance with the wish of the promisor shall be regarded as
the fulfillment of contract’s essential obligation of giving consideration."
Hence, the court held that the plaintiff's act of signing a deal with the constructor was done at
the request of the offender (the promisor), and that it therefore constituted a consideration as
per the provision mentioned under Section 2 (d) of the Act Indian contract Act.
In fact, it was a vow to compensate for the execution of an activity and could not be reversed
after the promise was fulfilled.
6
Kedarnath Bhattacharji vs Gorie Mahomed on 26 November, 1886 (indiankanoon.org) and Soujany, Kedarnath
Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji v. Gorie Mahomed – IJOSLCA (ISSN :
2582-872X).
Under Section 2(d) of the Indian Contract Act of 1872, the promise shall be "when a promise
is made or abstained from, or does or refrains from, the promoter wishes or promises to do or
to refrain from doing something, act, abstinence, or promise to do so." 8It's also the price
that one party pays for the other's commitment. The advantage of the contracting parties to an
accord is the consideration. For one of the parties, consideration may be "right, interest, profit
or advantage." It may be 'some complacency, bias, loss or responsibility that the other person
gives, suffers or takes on.9
The details of the matter were the restoration of an ongoing temple. As the work continued,
further money was needed and additional subscriptions were welcomed and a set of
7
Nishtha pandey, Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v.
Gorie Mohammad: All about the case! - iPleaders
8
https://www.taxmann.com/post/blog/consideration-under-the-indian-contract-act-1872/ .
9
The Essential of Lawful Consideration (lawteacher.net) and Nishtha pandey, Consideration under the Indian
Contract Act, 1872, available at: Kedarnath Bhattacharji v. Gorie Mohammad: All about the case! - iPleaders
10
What Is Law, Consideration and the Principle of a Contract (lawteacher.net).
11
Consideration- Section 2(d) of the Indian Contract Act,1872- Part I (lawvastutah.blogspot.com)
12
Doraswamy Iyer vs Arunachala Ayyar And Ors. on 15 August, 1935 (indiankanoon.org)
subscriptions was established to collect these contributions. The defendant was put on the list
of Rs. 125 and the claim failed in order to retrieve that sum. But the recovery of was
not permitted.13
The Hon'ble Justice CORNISH on the case further continued as described in the following:
"A complaint determined that the promise was taken into account in the following ways:
plaintiffs who rely on the subscriber's promise took responsibility in the repair of the temple.
The point is, whether this act qualifies as consideration and whether it can be taken
into account? The meaning of consideration in the law of contract is that if the promisor has
done something or has refrained from doing something, it qualifies for being
considered as consideration.
The definition therefore states that the promised person should have performed or
done something more than a commitment. There should be some discussion between them
about which consideration was given. The Promoter must have asked to make a guarantee in
view of the promised subscription." 14
The wise who additionally relied on the English case of Hudson, where there was a promise
made by one to pay a huge sum of money for restoration of the chapel, but when
unfortunately the promisor died after paying huge sum, it was ruled that the remaining money
could not be recovered from his successors. Moreover, it was also held that the spouse of the
promisor could not be made liable for the contract entered into by the promisor. By
implementing the concept adopted in this case, the judge presiding over current case ruled
that there wasn’t sufficient evidence to prove that the subscriber had actually requested the
plaintiff for repairing the temple. 15
In Radhakrishna Joshi v. Syndicate Bank16, his two children had a wreck after the death of
their father. His mother wrote to the youngest child and said she will bear the cost of Rs 50
lakhs if her elder son couldn't pay the debt that was not related to the family's assets. While
the sibling paid a portion of the sum. The mother accompanied the contribution to a certain
13
Doraswamy Iyer vs Arunachala Ayyar And Ors. on 15 August, 1935 (indiankanoon.org) and Nishtha pandey,
Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v. Gorie Mohammad:
All about the case! - iPleaders
14
Doraswamy Iyer vs Arunachala Ayyar And Ors. on 15 August, 1935 (indiankanoon.org) and Nishtha pandey,
Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v. Gorie Mohammad:
All about the case! - iPleaders
15
Nishtha pandey, Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v.
Gorie Mohammad: All about the case! - iPleaders
16
Radhakrishnan Joshi v Syndicate bank, ILR 2006 KAR 2365, available at: Radhakrishna Joshi vs Syndicate
Bank on 3 January, 2006 (indiankanoon.org).
degree but since they had to still pay the rest of the amount, she has requested for a
concession.
And as this contract has been included in the family agreement. It was held that section 25 of
the Indian Contract act could not impact the case because during such instances, an attempt
made to purchase family harmony was considered as a fair consideration 17 to make the
contract valid. 18
The House of Lords thus proposed in the case if Morrison Steamship Co Ltd. v The Crown 19
that the scant initiation of performance would not convert a deal into a contract to the effect
that the promisor would be bound to keep his promise but would be made liable and sued for
damages or a quantum meruit if he revokes it.20
VI. CONCLUSION:
Unbroken promises are irrevocable, and hence a promisor cannot avoid responsibility for the
promises he made. He must comply with the contract's terms. A contract's fundamental aspect
is consideration and this should be executed by each party to the contract. 21
conduct upon which the other party relied and acted upon for fulfilling his obligation agreed
within contract.22
From the foregoing, it is clear that the promisor can never rescind the promise after the
promisee has begun performing or completing the obligation specified under the contract
signed by the parties. And through this ruling, the High Court of Calcutta made it clear that a
promisor is not permitted to revoke his promise to perform his obligation when the other
party to the contract has commenced his commitment and partially completed his obligation
specified under contract upon the request of the promisor23. The significance of promise and
consideration were reiterated by the court in this case.24
Hence, it is very important that we understand that a person revoking his promise will be held
liable only when the other party to the contract has acted upon and commenced his obligation
upon the request of the promisor and thereby altered his position in the contract. In case, the
person hasn’t acted upon the request of the other party and did not perform any obligation, he
will not be eligible to sue the other party and claim compensation for his non-performance.
And to explain this, the case of Abdul Aziz v Masum25 would suffice, here the defendant who
had promised to donate INR 500 to funds that were being collected for restoring and
repairing a mosque, but since nothing had been commenced regarding the restoration of the
mosque, the defendant had not made any donations and he was sued for non-performance of
his obligation, and it was held in this case that a mere verbal promise made to subscribe to a
benevolent organization cannot make the promisor liable. 26
22
Mehar verma, Consideration and promissory Estoppel under Indian Contract Act, 1872, available at:
https://blog.ipleaders.in/consideration-and-promissory-estoppel/
23
Nishtha pandey, Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v.
Gorie Mohammad: All about the case! - iPleaders
24
Soujany, Kedarnath Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji v. Gorie Mahomed
– IJOSLCA (ISSN : 2582-872X)
25
AIR 1914 All 268. And Priya Dave, The doctrine of Promissory estoppel, available at:
https://www.patnauniversity.ac.in/e-content/law/LLM2.pdf.
26
Priya Dave, The doctrine of Promissory estoppel, available at:
https://www.patnauniversity.ac.in/e-content/law/LLM2.pdf.
BIBLIOGRAPHY
Section 25 of the Act carves out certain exceptions to the rule that consideration is a necessary requirement for
an enforceable contract.
Lord Wright, Ought the Doctrine of Consideration to be Abolished from the Common Law?, 49 HARV. L.
REV. 1225 (1936).
Soujany, Kedarnath Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji v. Gorie Mahomed –
IJOSLCA (ISSN : 2582-872X)
Kedarnath Bhattacharji v. Gorie Mahomed (1886) 7 I.D. 64 Cal. | One Stop destination for DU LLB students
(wordpress.com) and Soujany, Kedarnath Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji
v. Gorie Mahomed – IJOSLCA (ISSN : 2582-872X)
Kedarnath Bhattacharji vs Gorie Mahomed on 26 November, 1886 (indiankanoon.org) and Soujany, Kedarnath
Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji v. Gorie Mahomed – IJOSLCA (ISSN :
2582-872X).
Nishtha pandey, Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v.
Gorie Mohammad: All about the case! - iPleaders
https://www.taxmann.com/post/blog/consideration-under-the-indian-contract-act-1872/ .
The Essential of Lawful Consideration (lawteacher.net) and Nishtha pandey, Consideration under the Indian
Contract Act, 1872, available at: Kedarnath Bhattacharji v. Gorie Mohammad: All about the case! - iPleaders
Doraswamy Iyer vs Arunachala Ayyar And Ors. on 15 August, 1935 (indiankanoon.org) and Nishtha pandey,
Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v. Gorie Mohammad:
All about the case! - iPleaders
Doraswamy Iyer vs Arunachala Ayyar And Ors. on 15 August, 1935 (indiankanoon.org) and Nishtha pandey,
Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v. Gorie Mohammad:
All about the case! - iPleaders
Nishtha pandey, Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v.
Gorie Mohammad: All about the case! - iPleaders
Radhakrishnan Joshi v Syndicate bank, ILR 2006 KAR 2365, available at: Radhakrishna Joshi vs Syndicate
Bank on 3 January, 2006 (indiankanoon.org).
Nishtha pandey, Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v.
Gorie Mohammad: All about the case! - iPleaders
Morrison Steamship Co Ltd. v The Crown (1924) 20 LI LR 283, available at: The Doctrine of Promissory
Estoppel (legalservicesindia.com)
Soujany, Kedarnath Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji v. Gorie Mahomed –
IJOSLCA (ISSN : 2582-872X)
Mehar verma, Consideration and promissory Estoppel under Indian Contract Act, 1872, available at:
https://blog.ipleaders.in/consideration-and-promissory-estoppel/
Nishtha pandey, Consideration under the Indian Contract Act, 1872, available at: Kedarnath Bhattacharji v.
Gorie Mohammad: All about the case! - iPleaders
Soujany, Kedarnath Bhattacharji v Gorie Mahomed, available at: Kedarnath Bhattacharji v. Gorie Mahomed –
IJOSLCA (ISSN : 2582-872X)
AIR 1914 All 268. And Priya Dave, The doctrine of Promissory estoppel, available at:
https://www.patnauniversity.ac.in/e-content/law/LLM2.pdf.