Rules regarding Consideration

Rules regarding Consideration

Rules regarding Consideration

Consideration in contract law is simply the exchange of one thing of value for another. Without consideration, a contract cannot be enforced or is otherwise avoidable. The following rules may be laid down regarding consideration:

(1) Desire (or request) of the promisor is essential: The act is done or loss suffered by the promisee must have been done or suffered if the desire of the promisor. An act done without any request is a voluntary act and does not come within the definition of consideration.

Examples: P sees Q’s house on fire and helps in extinguishing it. Q did not ask for his help. P cannot demand payment for his services.

(2) The consideration must be real: The consideration must have some value in the eye of law. It must not be sham or illusory.

(3) Public duty: Where the promise is already under an existing public duty an express promise to perform or performance of, that duty will not amount to consideration. There will be no detriment to the promisee or benefit to the promisor over and above their existing right and liabilities.

(4) Promise to a stranger: But a promise made to a stranger to perform an existing contract is enforceable because the promisor undertakes a new obligation upon himself which can be enforced by the stranger.

(5) Consideration need not be adequate: Section 25 provides that, “An agreement to which the consent of the party is freely given is not void merely because the consideration is inadequate, but the inadequacy of the consideration may be taken into account by the court in determining the question whether the consent of the promisor was freely given.”

(6) The consideration must not be illegal, immoral, or opposed to public policy: If either the consideration of the object of the agreement is illegal, the agreement cannot be enforced. The same principle applies if the consideration is immoral or opposed to public policy.

(7) The consideration may be present, past, or future: This follows from the definition of consideration given in the Act.

(8) Consideration may move from the promisee or from any other person: A person granted some properties to his wife C directing her.

(9) What is a good consideration: The rules or the necessary factors for consideration can be summed up as follows:

  • There must be a desire of the promisor;
  • It must be real;
  • Reasonable;
  • Not illegal, immoral or opposed to public policy;
  • Present, past or future; and
  • From the promisee or any person.