Consideration

Lecture 4
Barrister Tanvir Sarwar
Consideration is an essential element in a contract.
Subject to certain exceptions an agreement is not
enforceable unless each party to a contract gets
something.

In the case of Currie v Misa (1875) consideration is

defined as – ‘some right, interest, profit or benefit accruing
to one party, or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by the other.’

Similarly the Contract Act 1872 sec 2(d) defines

consideration- ‘when at the desire of the promisor, the
promisee or any other person has done…..,or promises to do
something….such promise is called consideration.’
For example-
a. X agrees to sell his house to Y for 10 Lac taka.
For X the consideration is the house and for Y
the consideration is 10 Lac taka.
b. X employs Q for 10,000taka per month. For X
the 10000taka is the consideration and for Q
the service he is providing is the
consideration.
c. You go to the CNG station and fill up your
cylinder for 400tk. For you the consideration
you are giving is the money and in return the
CNG station is giving you the Gas as
consideration.
 Types of Consideration
Consideration is classified into three types-
 Past consideration- suppose X does some work

for Y in April (without expecting something).

Next month Y promises X to pay 1000tk. Under
Indian law this is good consideration but in
English law this is not consideration.
 Present consideration-immediate consideration

like you buy some goods and pay and get

delivery immediately is called present
consideration
 Future consideration- buy now pay later.
 Rules of Consideration
There are certain rules for consideration-
• Desire of the parties- the act done by the

promisor must be done with their own desire.

An act done voluntarily cannot be a
consideration.
• Consideration must be real- the consideration

must have some value or in other words it must

have real economic value.eg promise to do
charity is not consideration
• Consideration must be sufficient not adequate.

E.g. P agrees to sell his car worth 10 lac for 1

lac taka to Q.
Therefore it is now important to know what
constitutes a good consideration-
• Physical goods
• Services
• Forbearance, suffering of loss
• Arbitration or compromise of dispute
• Settlement with creditors.

For example-
P promises not to sue Q for breach of contract
if Q can assure him that he will compensate P.
 No consideration no contract

Promising to donate to charity or promising to

make mosque or any public toilet etc. are not
contracts.

E.g.- P promises to build a public toilet for the

habitants of Bashundhara. If P does not build no
one can sue. Similarly if Grameen phone
promises to donate 1 million dollars to
universities to support telecommunication
studies in return of nothing, then there is no
contract.
But however there are some exceptions-
• Gifts
• Natural love and affection
• Promissory estoppel- if u promise then you

must do if the other party suffers loss due to

the promise then there is a contract.
 Terms of a contract
The terms of a contract must be certain and clear.
This means that all the rights and liabilities must be
ascertainable from the terms of the contract.

A contract must not include any term or condition

which is against law. The terms must not exclude
liability for quality of goods and services.
The Sale of goods Act 1930 provides that goods and
services should be of satisfactory quality. The unfair
Contract Terms Act provides that liability for quality
of goods and services under the above acts cannot
be excluded by any term.
 Void and voidable agreements
An agreement which does not satisfy the elements
of a contract may be either void or voidable.
Void
An agreement not enforceable by law is called a
void agreement (sec 2.g)
• Restraint of marriage
• Minors agreement
• Restraint of lawful trade or profession
• Impossibility of performance
• Unlawful objects
 Voidable agreements
A voidable agreement is one which is
enforceable by law but can be avoided for some
reasons like
 Threat
 Undue influence
 Misrepresentation
 Lack of stamp duty or registration

There are certain contracts which are illegal

such as to kill, to bribe, to supply arms other
than concerned officials.
 Quasi Contract
When person obtains benefit at the expense of the
other and the circumstances are such that he ought
reasonably and equitably must pay for the benefit
even though they are not in a contract.
For eg- A supplies B a minor or lunatic with
necessaries, then A can claim the money from B’s
property.
A leases his land in Gulshan to B. A fails to pay
revenue tax and the Govt. is selling the land, then B
pays the tax to save his interest, then B can claim the
money from A.
Delivery man leaves pizza at B’s house by mistake
then B must pay.
 Termination of contract

A contract can be terminated mainly by-

 Performance
 By mutual agreement (alter, remission etc.)
 By acts of god
 Frustration
 Outbreak of war
 Destruction of object
 Change of law
 Strike, riot etc.
 Frustration
 Frustration- a contract is frustrated where after
the contract was concluded, events occur which
make performance of the contract impossible,
illegal or something radically different.

This is usually hard to prove thus modern

contracts tend to put clauses regarding hardship
or force majeure clauses.eg that in the event of
any hardship the contract comes to an end.
 Damages for breach
If a contract is breached then there are damages
available . These are mainly-
 Rescission –the aggrieved party is released from

contract
 Suit for damages- sue for any loss suffered
 Specific performance
 Injunction
 Specific performance
Specific performance means compelling to
perform the contract specifically. This is a relief
given discretionarily in cases where monetary
damages are inadequate. This is awarded in
limited number of cases.

For example- contract for the delivery of piece

of Art, rare article, contract for specific land or
property. X pays £10 million for collection of
your antique coins.
 Injunction
A party in a contract can be restrained from doing
some act or may be compelled to do some act.

For example- Ananta Jalil (AJ) enter into an

exclusive contract for 5 years to do TV ads for
Grameen phone. GP can compel AJ to refrain from
doing any other TV ads.
 Topics covered
 Consideration
 Terms
 Termination of contract
 Damages
 Void, voidable and quasi contracts
 Specific performance
 Injunction
 frustration