Law of Contract, 1872
Q. What is consideration? Explain & state in particular
whether inadequacy of consideration shall make a contract invalid.
Ans: - Section 2 (d) of Indian
Contract Act, 1872, defines consideration as "When at the desire of the promisor
the promise or any other person has done or abstained from doing or does or
abstains from doing something, such act abstinence or promise is called a
consideration for the promisor.”
Consideration is an advantage or
benefit which moves from one party to another. It is the essence of bargain. It
is the reciprocal promise i.e. to do something or abstain from doing something
in return of a promise. It is necessary for an agreement to be enforceable by
law. In consideration both the parties give something & get something in
return. It may be in cash or kind.
following are the rules related to the consideration:-
must move at the desire of promisor. If it is done at the instance of a
third party without the desire of the promisor, it is not consideration. Act
done at the desire of a third party is not a consideration. Act must be done
voluntarily at the desire of the promisor.
may move from the Promisee or any other person in the
Indian Law so that a stranger to the consideration may maintain a suit. A
consideration may move from the promise or any other person. Consideration from
a third party is a valid consideration. Under English Law, however,
consideration must move from the Promisee only.
may be past, present or future. The words used in Section 2(d) are
"has done or abstained from doing (past), or does or abstains from doing
(present), or promises to do or to abstain from doing (future) something” This
means consideration may be past, present or future.
must be mutuality in consideration.
must be real & not illusory, infinite or vague. Although
consideration need not be adequate, it must be real, competent and of some
value in the eye of law. Physical impossibility, legal impossibility, uncertain
consideration & illusory consideration.
(vi) Consideration must not be unlawful, illegal,
immoral or opposed to public policy. The consideration given for an
agreement must not be unlawful. Where it is unlawful, the courts do not allow
an action on the agreement.
need not be adequate. Consideration as already explained means
"something in return”. This "something given”. The law simply provides that a
contract should be supported by consideration. So long as consideration exists,
the courts are not concerned as to its adequacy, provided it is of some value.
"The adequacy of the consideration is for the parties to consider at the time
of making the agreement, not for the court when it is sought to be enforced.”