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Consideration is an essential element in a contract.

Subject to certain exceptions, an agreement is not


enforceable unless each party to the agreement gets
something. This “something” is called consideration.

Section 2(d) of the Contract Act defines consideration


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 to abstain from doing something,
such act or abstinence or promise is called a
consideration for the promise.”
An analysis of the above definition will show that it
consists of the following four components:
• The act or abstinence or promise which forms the
consideration for the promise, must be done at the
desire of the promisor;
• It must be done by the promisee or any other
person;
• It may have been already executed or is in the
process of being done or may be still executory;
• It must be something to which the law attaches a
value.
Example- P agrees to sell a house to Q for 50,000 tk.
For P’s promise, the consideration is 50,000 tk. For
Q’s promise, the consideration is the house.
Types of consideration
Consideration may be classified into three types, as
follows-

Past consideration- When the consideration of one


party was given before the date of the promise, it is
said to be past.

Example- A teaches the son of B at B’s request in the


month of January, and in February B promises to
pay A a sum of 500 tk. for his services. The services
of A will be past consideration.
Present consideration- Consideration
which moves simultaneously with the
promise is called present consideration
or executed consideration.

Example- B buys an article from a shop and


pays the price immediately. The
consideration moving from B is present
or executed consideration.
Future consideration- When the consideration is
to move at a future date, it is called future
consideration or executory consideration.

Example- X promises to sell and deliver 10 bags


of sugar to Y for 5,000 tk. after a week, upon
Y’s promise to pay the agreed price at the time
of delivery. The promise of X is supported by
promise of Y and the consideration is
executory on both sides.
Rules (or the essential factors) of
consideration
The following rules may be laid down regarding
consideration-
1.Desire (or request) of the promisor is essential- In
order to constitute legal consideration, the act or
abstinence forming the consideration for the
promise must be done at the desire or request of
the promisor. An act done without any request is a
voluntary act and does not come within the
definition of consideration.
Example- A sees B’s house on fire and helps in
extinguishing it. He cannot demand payment for his
services because B never asked him to come for
help.
2.Consideration may move from the promisee or
from any other person- Consideration need not
move from the promisee alone but may proceed
from a third person. It may move from the
promisee or from any other person. This means
that even a stranger to the consideration can sue
on a contract, provided he is a party to the
contract.

Example- A person granted some properties to his


wife C directing her at the same time to pay an
annual allowance to his brother R. C also entered
into an agreement with R promising to pay the
allowance to R. This agreement can be enforced
by R.
3.Consideration may be past, present or future-
Consideration may consist of a past, present or a
future act or abstinence.

4.Consideration must be ‘something of value’- The


consideration must have some value in the eye
of law. It must not be sham or illusory.
Consideration must be real and competent.
Where consideration is physically impossible,
illegal, uncertain or illusory, it is not real and
therefore shall not be a valid consideration.
(i)Physically impossible- A promise to do
something which is physically impossible does
not form valid consideration.
Example- To make a dead man alive or to run at
speed of 100 kilometers per hour does not
form valid consideration.
(ii)Legally impossible- A promise to do
something which is illegal, does not amount to
good consideration.
Example- A promise for illegal cohabitation.
(iii)Uncertain consideration- A promise to do
something which is too vague and uncertain is no
consideration in the eye of law.

(iv)Illusory consideration- Again, an illusory or


deceptive consideration does not amount to a
valid consideration. Consideration is illusory if it
consists in a promise to perform a public duty, or
to perform a contract already made with the
promisor.
Exceptions to the rule, “no consideration, no contract”
An agreement made without consideration is void. But
there are a few exceptions to the rule, where an
agreement without consideration will be perfectly valid
and binding. These exceptions are as follows-
1.Natural love and affection- An agreement made
without consideration is enforceable if, it is-
• Expressed in writing, and
• Registered under the law for the time being in force for
the registration of documents, and is
• Made on account of natural love and affection,
• Between parties standing in a near relation to each
other.
Example-(a) A promises, for no consideration, to give
to B 1,000tk. This is a void agreement.
(b) A for natural love and affection, promises to give
his son B, 1,000tk. A puts his promise to B into
writing and registers it. This is a contract.
2.Voluntary compensation- A promise made without
any consideration is valid if, “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.”-Sec.25(2)
Example- A find B’s purse and gives it to him. B
promises to give A 500 tk. This is a contract.
3.Time-barred debt- Where there is an agreement, made in
writing and signed by the debtor or by his authorized
agent, to pay wholly or in part a debt barred by the law of
limitation, the agreement is valid even though it is not
supported by any consideration.
Example- A owes B 1,000tk. but the debt is barred by the
Limitation Act. A signs a written promise to pay B 500tk.
on account of the debt. This is a contract.
4.Agency- No consideration is required to create an agency.
5.Completed gift- The rule “no consideration, no contract”
does not apply to completed gifts.
Example- If a person gives certain properties to another
according to the provisions of the Transfer of Property Act
(i.e., by a written and registered document) he cannot
subsequently demand the property back on the ground
that there was no consideration.