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Section 2 (d) Indian contract act When at the desire of the promisor, the promisee or any other person has done or abstain from doing, or does or abstain from doing, or promises to do or abstain from doing, something, such act or abstinence or promise is called consideration

Consideration May be : An act - means doing of something. An abstinence promising not to do something . A promise the promise of each party is the consideration for each other


Must move at the desire of the promisor Xs house catches fire, and Y helps in extinguishing it without being requested to do so by X. Y cannot demand any payment for his voluntary service. It must move from promisee or any other person For making a valid contract consideration must be there, it is immaterial who furnishes it.

May be past, present or future :

1. Past Award in cash for saving the house from fire . 2. Present Cash sales 3. Future X promises to deliver 100 quintals of rice to Y after a month and Y promises to make the payment a month after delivery of rice.

It need not be adequate Law only requires presence of consideration & not the adequacy of it.

Must be real It must have some value in the eyes of law. It should not be:

(1). Physically impossible making a dead person alive. (2). Legally impossible X files a suit against Y for non payment of debt. Y approaches Xs brother Z & he promises to withdraw the suit for a consideration of Rs. 500. It is legally impossible.


1)It must move at the desire of the promisor. [Durga Prasad v. Baldeo ] 2)It may move by the promisee . [Chinnaya v. Ramayya ] 3)It must be past ,present or future . 4)It need not be adequate . 5)It must be real . 6)It must not be illegal , immoral or opposed to public policy .

No consideration, No contract Exceptions to the rule

Natural love & affection . [Sec 25(2)] is valid if it satisfies the following conditions : 1. It is in writing 2. It is registered under law 3. It is made out of love & affection 4. It is between parties standing in a near relation to each other. X promises his son o give Rs. 1000 in writing & get it registered.

It is general rule of contract that only parties to contract can sue & be sued on that contract . This rule is known as Doctrine of privity i.e relationship between the parties to contract . Exceptions 1)A trust or a charge . 2)Marriage settlement , partition or other family arrangements . 3)Estoppel 4)Assignment of contract . 5)Contract with agent . 6)Convenants running with land .

STRANGER TO CONTRACT cannot sue Exceptions to the rule


Where trust is created - Beneficiary can sue. X transfers all his property to Y to be held in trust for the education of Xs son Z. Here Z, though not a party to the contract can enforce the trust against Y because he is the beneficiary under the trust.

2. Where a charge is created on a specific immovable property B borrowed some money from L against a property. Before paying it back he sold that to X. So now L can sue X (coz he was having the knowledge of the previous contract).

3. Family arrangements ( invest equally for mother)

4. Agency third party can sue principal (if contract is according to authority) or agent (if not).
5. Acknowledgement A receives money from T to be paid over to P. A admits of this receipt to P. P can recover from A who shall be regarded as agent of P.

A stranger to consideration can sue, provided he is a party to contract

X pays Rs. 50000 to Y directing him to build a house for Z. Y agrees to do so. Hence, Z is a party to a contract but stranger to consideration & he can enforce the contract. Case : CHINAYYA Vs. RAMAYYA

Compensation for voluntary services . [Sec 25(2)]. Time barred debt [ Sec. 25(3)]. Completed gifts (donor and donee).[ Explanation 1 to Sec. 25] Contribution to charity- kedar nath v Gauri dutt Agency [ Sec. 185]

No Consideration, No Contract Exceptions. (Sec 25)

Natural Love and Affection. [Sec 25(1)] Compensation for services rendered. [Sec 25(2)] Time barred debt. [Sec 25(3)] Completed gifts. [Exp 1 to Sec 25] Agency. [Sec 185] Remission. [Sec 63]