Qs. Discuss the meaning of consideration? When the consideration becomes unlawful?

How
does the public policy affect the consideration?
or

Qs. An agreement without consideration is void". Discuss with exception ( something in

return) quid pro quo

Ans: the consideration has an important place in the contract. It is an important part of the
contract. A valid contract requires a consideration. Agreements without consideration are
void. The study of consideration In respect of subject matter is required.

Definition

Section 2(d) of the Indian contract Act, 1872 defines consideration. It says "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 promise to do or to abstain from doing something, such act or
abstinence or promise is called consideration for promise.”

In other words, when at the desire of one person, another person does any act or abstain
from doing, then it is a consideration for the first person.

Example

A proposes to 'B' to buy his cycle for Rs. 1000 B agrees to buy that cycle for Rs. 1000 Here,
Rs. 1000/- is the consideration for his cycle.

According to Pollock- A party does or abstain from doing or promises to do or abstain from
doing something, is a price for which the promise of other party is bought, the promise thus
given for value enforceable.

According to Anson- "Consideration to that which is to be done, abstain from doing, to be

bear or promise to do or which the promises abstains from doing in respect of promise or
bears it".

Above definitions shows the following elements of consideration-

● Consideration to be given at the desire of promisor;
● Consideration to be given by the promise or any other person;
● Consideration may be past, future or present:
● Consideration may be an act, abstinence or forbearance or return promise;
● Consideration must be legally adequate and valuable; and
● Consideration must be valid

Case Law

Ms. Mirahul Enterprises Vs Smt. Vijaya Srivastava - Delhi High court said that, it is
essential that the consideration should be definite for a valid agreement.

Types- consideration are mainly of three types-

 ● Present consideration:
● Past consideration:
● Future consideration.

Present consideration means such consideration which is paid to the promisor immediately.
Example A offers B to sell his vehicle for Rs. 50,000. B pays to 'A' Rs. 50,000/- at that
moment, and 'A' gives the possession of the vehicle to 'B'. This is a present consideration.

Past consideration is the consideration made for the service or promise performed in the
past.
Example- 'A' at the desire of 'B' takes care of the family of 'B'. after three years. B promises
to A that he shall pay him Rs 10,000 for his services given here, the services provided by A
in the past to 'B', shall be called past consideration.

Future consideration means such consideration which is to be paid in future.

Example- A promises to sell his house for Rs. 75,000/- to B on 5 Feb 2013, and both parties
decide that possession of house shall be delivered on 1" Dec, 2013 and on that day the
payment of Rs. 75,000/- shall be made. This is future consideration, because the contract
has originated on 5 Feb,2013 but its consideration was to be paid on l' Dec. 2013.

When the consideration is illegal-

A valid contract requires that the consideration should be valid. Legal contract with illegal
consideration is not enforceable. Section 23 of the contract Act mentions those situations in
which the consideration shall be considered to be illegal. These situations are as follows

(i) When it is prohibited by law:

(ii) When it is of such nature that if is allowed it would defeat
the provisions of law;
(iii) When it is fraudulent;
(iv) When it is involves injury the person or property of another,
(v) The court regards it as immoral or opposed to public policy.

(a) Consideration forbidden by Law- such agreements are void. An agreement or act
forbidden by law is that which is not permitted by law or which is against law.

Ram Sewak Vs Ramcharan

the partners of a partnership firm made an agreement for the concealment of profit for the
purpose of invasion of tax. It was held as an illegal consideration or an agreement forbidden
by law.

(b) Consideration to defeat the Provisions of Law- an agreement with such consideration
is also void whose purpose is to defeat the provisions of law. In other words, where an
agreement is done with such consideration that if applied defeats the provisions of law, then
such consideration and agreement shall be considered void.
Example A & B agrees with the intention that they shall be able to take any dispute related
to a particular subject to the court, even though the limitation for it has been determined.
This agreement defeats the provisions of limitation act, and is, therefore void.

Nutan Kumar Vs Additional District Judge Second, Banda court held that such an
agreement between the landowner and tenant which is inconsistent to the provisions of Rent
Control Act shall be void. Such agreements cannot be enforced through court.