INTRODUCTION

According to Section 2(h) of the Indian Contracts Act, any agreement that is legally
enforceable is considered to be a contract. In order for a contract to be formed, one of the
essential aspects of the agreement must be the presence of some form of consideration.
Sections 2(d) and 25 of the Indian Contracts Act of 1872 have special clauses on this feature.
According to Section 25 of the Indian Contracts Act, any contract entered into without
consideration is null and void and cannot be enforced. In law, Adequacy of consideration
states that in order for two parties to enter into a legally binding agreement, the offeree, also
known as the beneficiary, must pay a fair price that is either equivalent to or fairly
proportional to the value given by the offeror, also known as the benefactor.
RESEARCH OBJECTIVE
1. To Highlight the Principles of Adequacy of Consideration

2. To distinguish between Adequate Consideration V. Sufficient Consideration

3. To highlight the Adequacy of Consideration in the Performance of an Existing Duty

PRINCIPLE OF ADEQUACY OF CONSIDERATION

In exchange for consideration, parties may offer monetary sums, make a pledge to do
something, or make a promise not to do anything.
A consideration from the past, such as a party agreeing to execute a work that he is already
legally obligated to perform or that he has previously completed, is not deemed sufficient
consideration.
Once the parties have agreed on a consideration, the agreement may be considered binding
even if the price is not exactly equal to the commitment made by the parties.
A consideration is deemed inadequate if it includes a worthless item or a false promise.
The amount or performance offered in exchange for a consideration must be of a recognisable
value to the court.
A factor that contravenes public policy, such as prostitution, is regarded insufficient

Sufficient Consideration vs. Adequate Consideration

Both adequate and sufficient considerations involve a given value for a contract to be legal,
there is a slim difference between them. Whereas adequate consideration demands that a
contract constitutes a fair value, sufficient consideration only considers the value as a factor
— irrespective of whether it is fair or not.
Adequacy of Consideration in the Performance of an Existing Duty
The cases reveal that a great deal is dependent on the nature of the duty that the promisee is
already under obligation to undertake when the promise is made. There are three fundamental
kinds:
a) Duty Imposed by Law
b) Duty imposed by Contract with the Promisor
c) Duty Imposed by Contract with the Third Party

Consideration need not be adequate

It is not required that the consideration be equal to or sufficient in comparison to the promise
made. To qualify as consideration, the consideration must be something to which the law
gives consideration. The value of the consideration is determined by the parties, not by a
court of law.
For Example- For example, I sold you a table and you gave me Rs 500 in exchange. Given
that determining the value of the table will be difficult for a court to determine, if I am
satisfied with the amount of money received, the consideration is valid.

Carlill v. Carbolic Smoke Ball Co.

Facts. On November 13, 1891, the Carbolic Smoke Ball Company of London (Defendant)
advertised in many newspapers that its product, “The Carbolic Smoke Ball”, would prevent
colds and influenza if used three times daily for two weeks. As a show of their sincerity, the
smoke ball's makers promised a 100£ prize to anyone who acquired influenza after using
their product. Lilli Carlill (Plaintiff) purchased a smoke ball and used it as instructed. Soon
after starting to use the smoke ball, Plaintiff got flu.

Issue
There were 4 main issues raised:

1. Whether there was any binding effect of the contract between the parties? 
2. Whether the contract in question required a formal notification of acceptance? 
3. Whether Mrs Carlill was required to communicate her acceptance of the offer to
the Carbolic Smoke Ball Company? 
4. Whether Mrs Carlill provided any consideration in exchange for the reward of 100
pounds offered by the company?
Held
The Court of Appeal held that the plaintiff is entitled to claim 100 pounds from the defendant
as it was a binding contract with valid consideration.
Adevrtisement is a promise
The Contract was Binding

Section 2(D)

It is formally defined as “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 to abstain from doing, something, such act or abstinence or promise is called a
consideration for the promise”