“An agreement without consideration is void”. With reference to this statement, discuss the general principle of consideration and its exceptions. Based on section 2(d) , consideration is an essential detail for the formation of a agreement. It could include a promise to perform a desired act or a promise to refrain from doing an act that one is legally entitled to do. In a bilateral agreement consideration is an settlement by way of which both parties alternate mutual promise that each promise is regarded as enough consideration for the alternative. In a unilateral contract, an settlement by means of which one party makes a promise in exchange for the other’s performance, the overall performance is consideration for the promise, while the promise is consideration for the overall performance. There are 3 types of consideration, they are Executory consideration, Executed consideration and Past consideration. Executory consideration is defined as a promise in return to a promise. When a person promises something, and in return for his promise the other party promise to do or suffer something. An example of case that can be referred to is K. MURUGESU V NADARAJAH, where the appellant agreed to sell, and the respondent agreed to buy, a house from the appellant. The agreement was written on a piece of paper. Later the appellant refuse to perform the contract and argued that there was no consideration in the agreement and therefore the contract is void. Court held that the agreement must be seen to be a case of executory consideration. A promise is made by one party in return for a promise made by the other. In such case, each promise is the consideration for the other. Executed consideration is defined as a performance of an act in return to a promise. When there is a promise been made by one party, and the return for that promise is the performance of an act by the other party. Once the other party performs the act as required by the promisor, the consideration is executed . Thus, the contract is binding. An example of case that can be referred to is CARLILL V CARBOLIC SMOKE BALL Co, where the defendant stipulated that anyone who fulfilled the condition of the offer would be entitled for the reward offered if he still suffers influenza. The plaintiff had fulfilled the conditions even though she did not communicate her
acceptance to the defendant. Court held that once the plaintiff fulfilled or performed the condition of the general offer of the defendant, the consideration is said to be executed, and therefore there is a binding contract. Past consideration is a consideration which has been done or completed before the promise is made. An example of case that can be referred is KEPONG PROSPECTING LTD V A.E. SCHMIDT, where Schmidt a consulting engineer had assisted Mr. X in obtaining a prospecting permit for mining iron ore in the state of Johore. Schmidt also helped in the formation of a company; Kepong Prospecting Ltd.
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- Spring '17
- Tan Soh Sim, Johore. Schmidt