CONSIDERATION

Definition: Consideration
When at the desire of the promisor, the promisee
or any other person who 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.
 Consideration
Consideration – something of legal value given in
exchange for a promise.
Something in return.
Sale of house for 10 lacs.
Consideration is a necessary element for the
existence of a contract.
Common types of consideration are:
A tangible payment (money or property); or
Performance of an act (e.g., providing legal services).
 Example: Consideration
• A promises B to guarantee payment of price of the goods which B
sells on credit to C. Here selling of goods by B to C on credit is
consideration for A’s promise.

• A asks B not to sue C for a year for his debts and promises in case of
default of C, A would be liable. Here B not filing a suit for a year is
abstinence, which is a sufficient consideration for A.

• A promises to deliver iPhone to B and B promises to pay Rs. 85,000

on delivery. Here the consideration for A will be Rs. 85,000 on
delivery and consideration for B will be delivery of goods
Essentials elements of consideration
 Essentials of consideration
•Desire of promisor: Not any other party or voluntarily. A saved B’s house….can
A ask for consideration for services?

•Promisee or other person: An act of forming a consideration may be done by

the promisee himself or any other person…
The consideration can move from one person to the other..e.g. A gifts a house to
B on a condition that B will pay certain amount of money to A’s brother C.
•Act or abstinence: to do or to refrain from…… A promise not to sue B if B pays
him additional Rs. 5000.
•Past, Present and Future considerations:
1. Teaching in January, but the promise was made to pay for services in February.
2. Immediate exchange of considerations by both the parties.
3. Both parties promise to pay each other later.
 Essentials of consideration
Consideration may or may not be adequate: It is not necessary that
consideration is equal in value to the promise. Like a house of price 400000
is sold for 50000. It is a free consent and a valid contract.
Real and competent consideration: The consideration is said to be real
and competent unless it is physically impossible to perform, is illegal,
uncertain consideration and unreal consideration.
Not physically impossible to perform……A promise to put life in B’s
dead brother.
Not Illegal: A promise to give B 5000 if B beats C.
Not uncertain consideration: A hire B to perform some work for
reasonable amount of salary.
Not unreal consideration: promise to pay someone for his already
defined duties.
Natural love and affection as consideration

•The contract without the consideration is void, except

in these conditions:

Conditions
•In writing
•Contract is registered.
•Contract made on account of natural love and
affection
•Kind of relationship between the parties.
 Unlawful considerations and object

If the object or consideration is unlawful, the contract is void. A

rent a house to store illegal arms in the house.
i.e.
1. Forbidden by law (when any act is punishable by law). .e. g.
A promise B to divide the goods which were stolen from C.
2. Defeat the provision of law: If the nature of object or
consideration is such that if permitted, it will defeat the
provision of law. Not directly forbidden, but will indirectly
violate law. .. E.g. C fails to pay loan of a bank or HBFC, the
house is put on sale. C cannot purchase the house, but C asks
B to purchase it and transfer it back to C.
 Unlawful considerations and object
3. Fraudulent: A and B agree to commit fraud with C.

4. Injury to person or property: An agreement to put a

property on fire by two parties.

5. Court regards as immoral: A married woman is paid

money to divorce and marry the lender.

6. Court considers against public policy: The agreement

to pay a person to give false evidence.