SARSUNA LAW COLLEGE

Submitted By:

Jigyasu Sharma

Roll No. : SLC/20/179

Paper: General Principles of Contract and Specific Relief

Class: Three-Year LL.B. (Hons.)

Paper No: LB105C

Semester: 1ST SEM

Topic: PAST CONSIDERATION IS NOT A GOOD

CONSIDERATION. DISCUSS THE STATEMENT WITH CASE
LAWS AND STATE ITS POSITION IN INDIA.

Under The Supervision Of:

Prof. Souvik Dhar

Year: 2021

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 TABLE OF CONTENTS

CONTENTS PAGE NO.

1. Introduction - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3-4
1.1.Introduction
1.2.Research Problem
1.3.Objectives
1.4.Methodology
1.5.Sources of Study
2. Rules regarding consideration - - - - - - - - - - - - - - - - - - - - - - - - 5-7
3. Past Consideration - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8-9
4. Case Study - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10
5. Conclusion - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11

Acknowledgement ------------------------------- 12

References - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 13

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 Chapter - 1
1.1. INTRODUCTION

According to Section 2(d) of the Indian Contract Act, 1872, consideration is defined as follows:

“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 is called a consideration for the promisee.” This is a complex sentence.
Let’s break it down for further understanding and rewrite it as follows: At the desire of the
promisor if the promisee either

 Does something (in the past, present or future) OR

 Abstains from doing something (in the past, present or future)

Then, this act of doing or abstinence is called Consideration. Now, it has two aspects, either
doing some act or abstaining from doing something. Let’s look at some examples:

Example 1 – Doing something

Peter and John enter into a contract where Peter promises to deliver 15 curtains to John in one
month’s time. Also, John promises to pay Peter an amount of Rs 3,000 on delivery. In this
contract, John’s promise to pay Rs 3,000, on delivery, is the consideration for Peter’s promise.
Also, Peter’s promise of delivering 15 curtains is the consideration of John’s promise to pay.

Example 2 – Not doing something

Peter has taken a loan from his friend John. However, he has not repaid the loan yet. John
promises not to file a suit against Peter if he promises to repay the loan within a week. In this
case, abstinence on the part of John is due to the consideration of Peter’s promise of repayment
of the loan.

1.2. RESEARCH PROBLEM:

 Study of the different cases and the facts of Contract

1.3. OBJECTIVES:

 To study the concept of the consideration.

 To know the aspects of different cases
 To evaluate the exceptions of the said rules

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1.4. METHODOLOGY:

This paper will rely on secondary data in the form of Journal Articles to explain the
main objective, and the secondary data in turn, will be critically analyzed. So, it will
be qualitative in nature. The objectives of the project will be verified when the project
is concluded, as a form of a top-down method.

1.5. SOURCES OF STUDY:

Secondary sources in the form of written documents such as Books, Magazines, Texts,
reports, and Journal Articles etc served as sources of study for this project

Chapter - 2

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Rules Regarding Consideration
According to Section 2(d) of the Indian Contract Act, 1872, the follows features are essential for
a valid consideration:

(i) Consideration must move at the desire of the promisor

Consideration can be offered by the promisee or a third-party only at the request or desire of the
promisor. If an action is initiated at the desire of the third-party, it is not a consideration.

Peter is going back home from work. On his way, he sees that his neighbor John’s house is on
fire. He immediately arranges for a water hose and manages to douse the fire. Peter cannot claim
any reward for his effort because it was a voluntary act and was not done at the desire of John
(promisor).

(ii) Consideration may move from the promisee to any other person
If you look at the definition of consideration according to section 2 (d) of the Indian Contract
Act. 1872, it explicitly states the phrase ‘promisee or any other person…’ This essentially means
that in India, consideration may move from the promise to any other person. However, it is
important to note that there can be a stranger to consideration but not a stranger to the contract.

Peter gifted his son, Oliver an apartment in the city with a condition that he pays a fixed amount
of money to his uncle, John, every year. On the same day, Oliver executed a deed to pay a fixed
amount of money to John every year. However, Oliver failed to pay and John filed a suit for
recovery. Oliver pleaded that he was not liable since no consideration had moved from John.
However, the court held the words ‘promisee or any other person…’ and allowed John to
maintain his suit for recovery.

(iii) It can be in the past, present or future

a.      Past

Since consideration is the price of a promise, it is normally given to induce the promise.
However,it can be given before the promise is made by the promisor. This is past consideration.
It is important to note that past consideration is not considered for a new promise since it is not
been given in lieu of the promise. According to Indian law, ‘past considerations’ is ‘good
consideration’ if it was given at the desire of the promisor.

Peter employs John to work on his field during the months of agricultural harvesting. He
promises to pay John an amount of Rs 5,000 for his services when he sows the new crop in the
fields. The services of John in the past constitute a valid consideration.

a.1. Past Voluntary services

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At times, a person might render voluntary services without any request or promise from another.
If the person receiving the services makes a subsequent promise to pay for the services, then
such a promise is enforceable in India under Section 25(2) of the Indian Contract Act, 1872
which states:

‘An agreement made without consideration is void, unless it’s a promise to compensate, wholly
or in part, a person who has already voluntarily done something for the promisor, or something
which the promisor was legally compellable to do; or unless.’

Peter finds John’s wallet on the road. He returns it to him and John promises to pay Peter Rs 500
for his services. This is a valid contract.

b.      Present

If the promise and consideration take place simultaneously then it is present or executed
consideration. An example is Peter goes to a shop, buys a bag of chips and pays for the same on-
spot.

c.       Future

When the consideration for a promise moves after the contract is formed, it is a future or
executor. It is also valid if it depends on the condition.

Peter promises to create architectural plans for John’s new house. John promises to pay Peter an
amount of Rs 50,000 provided the plans are approved by his wife.

(iv) It must have value in the eyes of the law

While the law allows the parties to decide an ‘adequate’ consideration for them, it must be real
and have value in the eyes of law. While the Court will not consider inadequacy, it will look at it
to determine if the consent was given by the party with free-will or not.

Peter’s wife agrees to withdraw the suit she has filed against him in return for his promise to pay
her a monthly maintenance amount. This is a good consideration and holds value in the eyes of
law.

(v) It should be over and above the Promisors’ existing obligations

If the promisor is already obligated either by his promise or law to perform or abstain from a
certain act, then it is not a good consideration for a promise.

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Peter receives a summons from the Court to appear before it as a witness for John. John
promises to pay him Rs 10,000 to appear in the Court. This contract is not valid because Peter is
obligated by law to appear in the Court on receiving a summons.

(vi) It cannot be Unlawful

A consideration that is against the law or public policies is not valid.

Peter offers Rs 10,000 to John to beat up his business rival. John beats him up but Peter refuses
to pay him. John cannot file a suit for recovery since the consideration is against the law.

Chapter – 3
PAST CONSIDERATION

ENGLISH LAW VS. INDIAN LAW

English law follows the principle that consideration and promise should be simultaneous.
Consideration being the price for the promise, should be given in response to inducement for
the promise, if the act has been done before any promise is made it is called past
consideration and past consideration is no consideration

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English law holds that the promise to pay for a wholly past act is no more than an expression
of gratitude, the past act can be an explanation as to why the promise was given but it cannot
be said to construe a legal relation. It is imperative for the consideration and promise to go
together. The English Law Reform Committee in its 6th Interim report recognised that this
rule created unnecessary hardships and inconvenience. It recommended abolition of the rule,
the logic involved was that a person’s promise to pay for a past act can be said to mean
recognition of the past consideration and therefore the promisor should not be allowed to
break his promise.

Past act at request good consideration under English Law

In 1616 during the case of Lampleigh vs Brathwait it was established that a past action done
at the request of promisor shall be a good consideration for a subsequent promise. The facts
of the case were that the defendant having committed murder requested the plaintiff to obtain
pardon from the king at his own expense which he shall later make good by paying him £100.
Later the defendant refused to pay but he was held liable.
The court held that “mere voluntary courtesy will not have consideration to uphold as
assumpsit but, if the courtesy were moved by a request of the party that gives the promise, it
will bind for the promise and the contract shall not be considered naked”
In present times the rule plays out that it is ordinarily in the contemplation of parties that the
services rendered at request would be ultimately paid for and that subsequent promise is
nothing but a fixation of reasonable compensation for the service.

POSITION IN INDIA

In Devukutty Amma vs Madhusudanan Nair (1955) the court observed that past consideration
is a good consideration under the Indian Contract Act and confirmed its deviation from the
English Common Law. Past consideration must necessarily consist of an act done without
any promise. It can either consist of services rendered at request without any promise or it
may consist of voluntary services.

Past Voluntary Services

Sec 25(2) of the Indian Contract Act states that ‘An agreement made without consideration is
void unless it is a promise to compensate, wholly or in part a person who has already
voluntarily done something for the promisor or something which the promisor was legally
compellable to do’ . This provision adequately covers past voluntary service. A few
illustrations mentioned in the act to support this provisions are
a. A finds B’s purse and gives it to him. B promises to give A Rs 50. This is a contract
b. A supports B’s infant son. B promises to pay A’s expenses in doing so. This is a contract

Past service at request

Requested services are not adequately covered by Sec 2(d) or 25(b). Sec 2(d) states the act to be
done at promise’s request. These points towards existence of a promise to pay for the act. The
question which remains to be answered is that, can this provision be construed to include an act
which has been done at request and for which promise to pay is subsequently given.
Mr JL Kapur states that ‘ They (the words has done or abstained from doing) declare the law to
be that an act done by A at B’s request, without any contemporaneous promise from B, may be a

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consideration for a subsequent promise from B to A. The use of perfect tense in the clause
embodies in the law of India the exception to the general rule which was made in the case of
Lampleigh vs Brathwait’

Chapter – 4

PRESENT CASE LAWS RELATING TO CONSIDERATION AND PAST

CONSIDERATION
1. Sri S Prasanna vs Smt Nanjamma on 27 January, 2021 – Karnataka High Court:

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Facts: A widow paid consideration of Rs 30L for a compromise decree in 2012 so that the
defendant relinquishes all rights and interest in the property. Petitioner contended that
compromise decree is a contract and is voidable on ground of nullum pactum

Judgement: Court held that compromise decree maybe voided normally on the grounds on which
an ordinary contract can be but the petitioner had received past consideration for settlement and
this is within ambit of Sec 2 (d) of the Indian Contract Act
2. Devender Kumar vs Brijesh & Anr on 16 January, 2019

Facts: The defendant agreed to sell parcels of land to plaintiff who paid advance sale
consideration. Defendant no. 1 offered plaintiff compensation of Rs 3cr plus double refund of
advance amount if plaintiff dint enforce his agreement. Plaintiff accepted the offer and a formal
MOU was executed. Defendant no. 2 undertook to pay amounts if D1 failed. The maintainability
of suit was challenged as the Agreements to Sell already had consequences for breach of contract
and double refund was not mentioned therewith. The question arose that whether MOU is a
contract and does it attract the exception of voluntary compensation mentioned in Sec 25(2)
Judgement: Sec 25 of the ICA declares void an agreement made without consideration. So if
MOU lacks consideration it will not qualify as a contract under Sec 10. The words "already
voluntarily done something for the promisor" in exception (2) to Section 25 of the Contract Act
cover cases where a person, without the knowledge of the promisor, or otherwise than at his
request, does the latter some service and the promisor undertakes to re compensate him for it. The
plaintiff, as aforesaid, has not pleaded what he did voluntarily for the defendants, for the
defendants to promise to pay the amounts under the MOU to the plaintiff. The Contract Act on
the contrary, in exception (2) requires the promise to be for compensation for a voluntary act or
for something which the promisor was compellable to do.
3. Alliance Bank vs Broom

Facts: Defendant owned an unsecured debt to the plaintiffs, upon the plaintiff asking for security
defendant promised to provide some goods but never produced them and argued that plaintiff did
not provide any consideration
Judgement: Held that normally in such case bank would promise not to enforce debt, but the same
principle was not followed here.

Chapter – 5
Conclusion:

From the above discussion it would be safe to conclude that although the English Common
Law holds past consideration to be a bad consideration with the exception in Lampleigh vs
Brathwait wherein it was held that if the past act had moved at the request of the promisor
with a subsequent promise to pay then the promisor shall become liable to pay, the Indian law
takes a different stand. This difference is clearly imbibed in Sec 2(d) which by the virtue of
its literary sense includes past, executed as well as executory consideration. The view that

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past consideration is good consideration in Indian law has been reiterated by the courts
several times. The departure from the English Common law was first made in Devukutty
Amma vs Madhusudanan Nair (1955) this departure was rightly so as the English Law
Reform Committee in its 6th Interim Report recognised the drawbacks of the rule that past
consideration was no consideration. The Indian legislators and jurists showed remarkable
diligence in recognizing past consideration as good consideration in both law and case.

ACKNOWLEDGEMENT
It is a matter of great pleasure to present this project on PAST CONSIDERATION IS NOT A
GOOD CONSIDERATION. DISCUSS THE STATEMENT WITH CASE LAWS AND
STATE ITS POSITION IN INDIA. I takes this opportunity to thanks our respected Principal
DR. ATASI ROY KHASKEL for giving me an opportunity to work on this field. I am very
thankful to my supervisor PROF. SOUVIK DHAR for her full support in completing this
project work Finally, I am gratefully acknowledge the support of my family/friends and

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would also like to thank to them who had given me full support and co-operated with me to
carry out these research work and help with me for the project work by filling up the report.

DIPTAJIT DAS

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 REFERENCES
1. GOOGLE
2. WEKIPEDIA
3. INDIAN KANOON
4. LEGAL PEDIA
5. CONTRACT ACT BY AVTAR SINGH
6. CONTRACT BARE ACT BY PROFESSIONAL
7. INDIA.GOV.IN
8. LEGISLATIVE.GOV.IN

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