is Consideration 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.
For example: A wants to sell his BMW car to B for TK. 10 lacs. In this example A is giving his
car to B in consideration of TK. 10 lacs, whereas, B is giving TK. 10 lacs to A in consideration of
the BMW car.
Types of Consideration:
a. Past Consideration: When the consideration of one party was given before the date of the
promise, it is past consideration. Example, Suppose Mr. A did some work for Mr. B on
the 15th of September, in October Mr. B promised to pay Mr. A some money. It is past
consideration. Under English law past consideration is not a consideration and is Void,
but according to the Indian law, past consideration is a good consideration because it
includes the words has done or abstained from doing.
b. Present Consideration: Consideration that moves simultaneously with the promise is
present consideration or executed consideration. Example, Mr. D buys a tooth brush
from the store and pays immediately. The consideration moving from D is present or
executed consideration.
c. Future Consideration: When the consideration is at a future date, it is future
consideration or executory consideration. Example, Mr. C buys goods from the stores
and promises to pay at a later date.
Rules of Consideration:
a. Desire of the promisor is essential
b. The consideration must be real
c. Public Duty
d. Promise to a stranger
e. Consideration need not be adequate
f. The Consideration must be not illegal, immoral, or opposed to public policy
g. The consideration may be past, present or future
h. Consideration may move from the promisee or from any other person
No Consideration No Contracts Exceptions to the rule:
Consideration is essential for the validity of a contract but a promise without consideration is a
law undertaking and cannot create a legal obligation.
Exceptions:
1. Natural love and affection: Father giving a gift to his son without considering anything
in return. He gave the gift to his son to show his love towards his son.
2. Voluntary Compensation: D found Fs wallet on the ground and returned it to F. F in
return voluntarily gave some money to D which D did not consider in getting anything in
return.
3. Time-Barred Debt: D was supposed to collect $100 from E in a week. D could not collect
the money in time and court cannot do anything about it, but E said he will give $50 back
to D by the next week.
4. Agency: You give D a cheque to withdraw money from the bank, D withdrew the money
without considering anything in return.
5. Completed Gift
Stranger to Contract: Can a person who is not a party to a contract sue upon it?
A person who is not a party to a contract can sue upon it, example A contract between P, Q and
R where P pays money to Q for delivering goods to R can be enforced by R although he did not
pay any part of the consideration.
Exceptions:
a. Beneficiaries in the case of trust
b. Provision of Marriage Settlement of Minor
c. Assignee of a contract
d. Family Settlement
e. Acknowledgement or Estoppel (meaning to STOP)