- - - - - - - - - - - - - ·•

• - w u x n f l l l f f11ff Tl lf f- r, -, -. r r•,.

As per Sec. 10. Con

sideration ls one of th
contract Considera e essential clements of
tion is one of the mai a valid
Consideration is said n building blocks of a
to be th.ere when ther contract.
promises popularly ca e is an exchange or sw
lled 'something m retu appmg of
rn• or the quid pro quo.
9nly such a promis
e which is made in
promisce, shall be en return of 'somcthin'g•
forceable, Gratuitous from the
m return' popularly ca promises (a promise fo
lled nudum pactum) ar r 'nothmg
consideration is requ c unenforceable; recipr
ired in a contract. ocity in
Blackstone: "Conside
ration is the recompens
to the other". e given by the.party co
According to Pollock
"' ntracting

•, consideration is •.....
of the other is bought the price for which the
". For exampl~. if X ag promise
lakh, the consider rees to sell his house to
ation for X\s ,s la Yfor '{S
consideration i;, the kh and for Y's prom
house. So consideratio ise the
both parties. n is 'something of value'
given by
( .,
DEFINITlON OF
CONSIDERATION I

{!ec. l( d fo f tne 1ndi

desire of the promis
an Contract Act defin
or, the promisee or
es consideration as "W
an y ot~e r pe
hen at the
rson ~as done or
' •
abstaine rom do'1ng or does or abstains from
.
d
f

'
to abstain rom do1·ng something such
.
f
do mg, or promises to do or
, . ,, ' act or · · ll d
abstinence or promise
consideration for the is ca e
promise.
ntracts Thirteenth ed
• Pollock on Co ition, P.133.
' ~~---~~
-~
 rx,unrlc:
• tSO lakh Is th c
'X i\sr~cs to s,cll his house to D' for, SO lakh. Here 'B's promise lo P11 Y I5 the
con~ldcratlon for 'A's promise to sell the house nnd 'A's promise 10 sell the ho~se
1
consldcrntlon for 8$ promise to pay t 50 lakh.
1

ESSENTIALS OF VALID CONSIDERATION

1. Consldctatlon must move at the desire of the promlsor, For valid
th
consideration, the act or abstir)en1ce forming the consideration for e
' . promise must be done at the desire or request of the promlsor, ~he
acts done or services rendered ~oluntarily, or at the desire of third
party, will not amount to valid consideration to form a contract. It is
not necessary that the promisor himself should be bencflttcd by the
act, but act must be done at his dcsjre.
Example: ..
·,
Xsees Y's house on fire and helps In extinguishing It. He cannot demand payment
for his services because Y never asked him to come for help.
Case Law: Durga Prasad v. Baldco (1881),,
Dhad built, at his own expens~, a market at the request of the Collector of
the District. The shopkeepers in the market promised to pay D some
commission on the goods sold by them. Boccupied one of the shops in the
market. When Dsued the shopkeepers for the commission, It was held that
the promise to pay commission did not a~ount to a contract for want of
consideration, because D(the promisee) had constructed the market not at
the desire of the shopkeepers (the promisors) but at the desire of the
Collector to please him.
2. Consideration may move or flow from the promisee or any other
person. Another essential of valid consideration, in Sec. 2(d), is that
consideration need not move from the promisee alone but inay proceed
from a third person. There must be a consideration for a promise, it is
insignificant who has furnished it.Jt may move from the promisee or
from any other person. This means that even a stranger to the
consideration can sue on a contract, if he is a party to the contract.
This means that 'privity of consideration' is not an essential condition
but 'privity to contract' (concept explained on page 3.6) is.
Case Law: Chlnayya v. Ramaya (1881)
A, an old lady, by a deed of gift, made over certain property to her daughter
R, w~th a direction that the daughter should pay an annuity to is brother C.
as has been done by A. Accordingly, on the same day R, the da~ghter,
 Consldcra tlon n
executed a writing in favour of her maternal uncle C agreeing to pay 1hc
annuity. Afterwards she declined to fulfil her promise saying thi1t no

I consideration had moved from her maternal uncle i.~.,'the promisee. It was
held that the words "the pro1msee or any other per$or( in Sec. 2(d) clearly
show that a stranger to consideration may maintain a suit. Hence the maternaJ
uncle, though astranger to the consideration (as the consideration indirectly
moved from his sister) was entttled to maintain the.suit,
I '
3, Consideration need not be contemporaneoo~ with contract. The

I.
i.
definition of consideration clearly indicates~that ·the consideration
may consist of ei~her something done or not do~e in the past, or done
or not done in the present or promised to be dp~e or not to be done in
the future. So, consideration may be past, present or future and it ~
'
need not be contemporaneous with contract. ~
• l
Consideration may consist of an act or abstin6nce. Consideration may
~
consist of either a positive act or an abstin{n~e I.e., a negative act.
Consideration need not always be doing some a'ct.1 It can be not doing an
act also. '
Example:
:, ::•

.
• ,.

.
•\

. '..' ,
~

•'
t

'
'
..,
1'1

'l
'
~
''...
'/\owes~ l lakh to B. Aasks him not to file a suit as~:inst him for one year on 'A's
agreeing to pay him f 10,000 more. Here the abstinenc< of' B' is the considera tton
for 'A's promise·to'pay more. • ·;·
•, ~
~
Past consideration. When something is do~ ·or suffered before the
I I

date of the agreement, at the desire of the p~otnisor, it is called 'past

•' ,(
~
consideration:
,.'·.
.. :

~
'

Example:
• I

A teaches the son of B at B's request ip the month of January, and in Febru.iry
R promises to pay A a sum off 5,000 for his scrvic~;: The services of A will be
past considen1tion. •
..,
~
.. .
,• I

Present Consideration
Consideration which move~ simult'aneously wi~h the promise is called
present consideration. 'Cash sales' is an app.ropriate example of the
present consideration. •'
Future Consideration
·, :·
I

When the consideration is to move at a future date, it is called future

or executory consideration. It takes the f~~m of a promise to be
performed_ in the future. :
 .•

I
.J ,,
3.4 .... ' Business Laws

' Example: ...

' ' • 'Il' promises to
W. promises 'B' to deliver him 100 bags of sugar at a future date.
pay for it on de~ytry. / '
worth in the •
4. Consid!ratio~ ptust be 'something of value or having
example,
eye of law~ CQ~sideration must be real and competent, for
be real
a -E_~omise nQt)o bore the promisor has not been held to
consideration!..(Wh
;
ite v. Bluett).
rtain or
Consideratio~ }vhich ~s physically impossible, illegal, unce
illusory, is nol-r.., eal and shall
,,
not. be term.ed as valid consideration .

(a) Physi~~lly-~impossible. A promise to do SOil)ethin

g which is
does·
physica1ly ·jmpossible, e..g., to discover treasure by magic
npt forn(valid consideration.
is illegal,
(b) Legally impossible. A promise to do soin;thing which
e.g., a pio~mise for prostitution, does ·not amount to
good
consideration. •
h is too
(c) Uncertai!) fOnsideration. Apromise to do something whic
erty
vague and ~ncertain, e.g., a person proposes to purchase a prop
for a reasoriable sum is no corysideration in the eyes of law.
,,.. ....
may give
(d) Illusory consideration. Illusory consideration means it
.
the imprelsion· o·f a. consideration which is not actually there
'
Illusory cons
,,
ideration q6es_ .
. not amount to a valid
consideration.
Consider~\ion has been held to. be illusory if ir consis_ts of:
~

(i) a prorpise to perform a public duty.

Case Law!: ~ollinsv. Godefroy (1831)
I
f of G. G
C received summons to appear at a trial as a witness on behal
C filed
promised ,him a sum of money for his :rouble. On default by G,
C being
the suit for the recovery of the promised sum. It was held that
consid-
under a pt'.Jblic duty to attend and give evidence, there was no
eration fo_r the promise. Hence the promise is unenforceable.
(ii) a pro~ise to perform a pre-existing obligation
under a contract.
Ramchan~ra Chintaman v. Knlu Raju (1877)
suit was
There wa/a promise to pay the lawyer an additional sum if the
ion. The
successfuC Held, the promise was void for want of considerat
to rende r the
lawyer w.is under a pre-~xis_ti~g. co~tractual obligation
ional
best of rus,~rvices under the original contract. So the claim for addit
sum is noi. v,lid. •
'k . e, an ·~g-;e ement to pay a doctor .for operation is valid. But an
La ew1s , ,
; .i
 3.5
,ngrccn1cnt to pt\y the doctor nn add
itional fee,,lf the' operation is
success(ul is void.
5, Consideration need not be adequ
ate: The consideration need not be
adequate to the promise for the val
idity of an agreement. The law
necessitates on the presence of consid
;
eration and not the adequacy of
,it,
The Peppercorn Theory of Consi
deration
In legal parlance, a peppercorn is a
metaphor for a very small payment,
a nominal consideration,., used to sat
isfy the requirements f?r creation
of a legal contract. The House of
Lords confirmed the doctrine th~t
I -. _c~~s_ideration must be there but nee
d not be adequate in Chappel and
Co. Ltd. v. Nestle Co, Ltd.
l~a4equacy of consideration is no
bar to ~ valid contract, unless it is
an evidence of unfree consent. For.ex
ample if Mr. A sells his car worth
_ ~l lakh for. ~-10,000/·, the con
tract shall not be v~id.on the-groun
inadequacy of consider~_tion but if d of
Mr. A alleges that buyer asked hi1n
to -do so at gunpoint, then the situ
ation would be different and the
co?tract shall b~ voidable at the opt
ion of Mr. A.
'An agreemen~ to which the consen
t of the promisor is· fre~.Iy given is
not void merel_y because_ the con
sid.eration is inadequate; but the-
-inadequacy of the ·consi4eration .ma
y be ta~e·n into account by the
Court in ·determining th; question wh
ether the consent of the promisor
wa~'freelf given (explanation 2 to S_e
c. 25). · • _'
The Doctrine of Fair· Ex-diange in
Cpntract Law
...
In simple words, if the· c~nside~a\ion
is shockingly inadequate and
one of the parties allege~ that his con
sent was not (ree, the court will
treat inadequacy as an evidence in
sup. port of such allegation.
.

I'
,.

•Black's Dictionary of Law. 7th edition·

, p. ~ 156
36

AN D ST RA NG ER TQ ,.
ST RA NG ER TO A CO NT RA CT
CO NS ID ER AT IO N ed
tion' is a valid con cep t as was establish
The concept of 'stranger to considera by
the def ini tio n of con sid era tio n un der Sec. 2(d ) and str eng the ned
by
v. Ra ma yya . Ho we ver , a
stra nge r to the con sid era tio n mu st be
Chinayya
tra ct....A stra nge r to a con tra ct me ans
distinguished from a stranger to a con a
tract. Such a per son can not , bri ng
a person who is not a par ty to the con
'Privity of Contract'.
valid suit. This is called Do ctr ine of
Do ctr ine of Pri vit y of Co ntr act •
of pri vity of con tra ct 1ne ans tha t the rig hts and obl iga tio ns -
The doctrine a
con tra ct. Th us, a con tra ct can not , as
exist only between the parties to the
era l rule, giv e rig hts or imp ose obl igations ari sin g un der it on any per son
gen
the par ties to it. On ly a pro mis ee ma y enforce the pro mi se. If the thi rd
except
to the con tra ct; he is a str ang er to the
par ty is not a promisee he is not privy ive ly by I;o rd Ha lda ne in
e pri nci ple wa s aff irm ed aut hor itat
contract. Th
Du nlo p Tyre Co. v. Sel fridge.
ge ( 1, 1S)
Cas e Law: Du ,ilo p Tyr e Co. v. Sel frid
d tyre s to De w & Co ., wh ole sal e
Du nlo p Tyre Co. (the plaintiffs) sol s
obt ain an und erta kin g fro m reta iler
dis trib uto rs, on terms that Dew would
intiff's list price. De w sol d som e of the
that they should not sell below the pla e
s) wh o sol d the m bel ow list price. Th
tyr~s t_o Selfridge & Co. (the defendant
ages. The action failed because though
plaintiffs sought an injunction and dam e
end ant s and Dew , the plaintiffs wer
the re was a con trac t between the def
ty to a contract can sue on it:
not a party to it and 'only a person wh o is a par
of
o app rov ed by the Su pre me Co urt
Rule of 'Pr ivi ty of Co ntr act ' was als
vancore, ( 1970).
Ind ia in Chacko v. State Bank of Tra
to the
Su e. A per son ma y be a str ang er
A Str ang er to a Co ntr act can no t ivi ty
con sid era ti~ ~ bu t he s~1 ould not be ~ stra nge r to the con tra ct bec aus e 'pr
tra ct 1s ess ent ial for enf orc ing any of the rig hts ari sin g ou t of the
of con
 _, I

~ontr:ict. It being a fundamental principle of the l~\'I. of contracts lbat

a it ranger to a contract cannot sue, only a penon _who is a party to "'
contract can ,uc on It, •
• . I

Exceptions. In the course of ttme, the judiciary and cµffercnt statutes have
U1lroduced a number of exceptions to provtdc equ1tab!e·Justtce So th e. 1ule
th at 'a ,tranger to a contract, cannot sue' 1s subJtCl to th~ following exceptions
{a) \Vherc an express or implied trust is crc.atcd. Setllor and TruS tee are
parties to a contract of trust. Settlor· is 'the auihor of the truSl "nd
trustee is the adminhtrator of trust. Beneficiary 'is not a party to truS t
but he can sue in his own right to enforce his rlgl,lts under the tru~t
t g. A transfers his property to B for the benefit bf orphanage(/ e., the
beneficiary) in their locality. After A's death if~B does not pJss that
benefit to orphanage, the orphanage am file a su,1t-against B lo compd
him to give benefits.
(b) Acknowledgement. If A receives some money from B to be p.11d to C
and he acknowledges this to C, then C can recov.~r this amount from ,\
fr) Law of Agency. The principal can sue on a cont~act entered rnto bv
his agent.
(d) Assignment of rights under a contract in fa\'our of a third party.
Assignment as a legal term means the process of transfer of rights of n
person to another (i.e. assignee} and It may be a voluntary Jss1gnment
or assignment by operation of law. '•
(,) Voluntarily: An assignee under an ass1gnm~nt made by the p1rt1es
can sue upon the contract for enforcement of his nghts. title ,rnd
interest. eg.. assignee of a promissory note
(11) By operation of law: The official ass1gni:e on the tnsolvcr ) t I .,
1xrson can sue on the contract even though ongm:ill} he w,1s not
party to 1t.
(e) Contract Labour (Regulation and Abolition) Act, 1970 \ ~ pet this
Act if the wages are not paid by the contractor, the contrJct Iabolll er
may sue the principal employer. •

THE RULE, "NO CONSIDERATION, NO CONTRACT., AND

ITS EXCEPTIONS I

Consideration being one of the essential elements of c1 valid contr,1ct the

'Be advtstd to note the d,ffcrcncc bttwccn settler and settler

J
 ••,•
J.

Bus111t1J Laws
,.
gtntra1 rul( is that .. an agreem,nt made without consideration is void." It is
•
rightly said that consi~cration is_ a universal requisite of contracts. The idea .
of redprocit)' is the~ _ distinguishing,mark. The gratuitous promise is
unenforceable. But thetc arc a few exceptions to the rule, where an agreement
without considcratio~will be perfectly valid and binding. These cxc(ptions
~,re as follow~: '.·
...
.
t

l. Agrccn,cnt mid, on account of natural love and affection

[Ste. 25(1)). A~~grtement made without consideration is enforceable
if all the follo'tlng conditions are satisfied simuhaneouslr (i) it is
expr~sscd in wr1ling (ii) it is regist~red u~der the law for the time
being in force ftit the registration of documents (iii) is made on account_
. ·,
of natural lC've ihd affection (iv) is made between parties standing ma
near rtlation t~ each other. These essential requirements n1ust be
(omplicd with-!~ enforce an agreement m_ade without consideration.
Examples: ,·(
,. . ' ,
(c1) A promiSt~/or no consideration, to gh·e to B t 1,000. This is a void •
~greement. ·:·.
{l,) A, for n:ituia) love and affection: promises to give his son B, ~ 10,000. A
puts his promise
... to.Binto writing and registers it This is a contract.
Existence of a riear
,.
relation ,between thr parties does not nece~sarily
mean natural love and affection. .
:. . .. . .
Case Law: Rajluk(iy Dabtt v. Bhootnath (1900)
A Hindu husband,after referring to quarrels between him and his wife, executed
> •
a registered document
.,
in favour of his wife, agrmng to pay for separate residence
~

and maintenance,.che agreement was held to bt void for want of consideration

because it was not. -made out of natural love and affe~tion. • •
2. Agreement to._compensate for past Yoluntary
~
. scn·icc Sec. 25(2). A
promise to compcns~tt, wholl)· or in part. a person who has already
• voluntarily done something for the promisor, or something which the
promisor was l~ally compellable to do shall be ,:alid. In simple word,
' . .
a promise to pay for pa,t voluntary 1ervice to the person who
rendered such iav{cc la binding.
f.Dmpla: -
(a) '.(YOlu~cllclsomfthlngfortheprom~or'B':A finds B's purse and
gives it to bbn. Bpromises to give A, S00. This is a contract
.. -
~) W10111atat"Jdlcl~which the promisor•e• was legally compel• J'
WIie to• 1" supports Bs Infant son. Bpromi"s to pay Xs expenses .
_....,. 111s Is acontnct. in
IN■'H Ii,., oaly to tlM ~n who rtndtrtd auch ltnices and ~
• . no- l
 .
UJ

"'''"' tbC'1 \I ,~ ~\ \ht th~ of hh Hft U\·t,l l\ fl\,m ,c-,lous a\(1J('nt i\n-.i R
''"'1'\l~u h, r~r' ll\OOa h, A\ J\\I\ C Uhl \tt(f (.\n do(~ l\('\ r•}' hhl\ (C), C
, •nn,,t l t, \'t\'t'r \t f1<'m 1' • ~ thl, Ii nC1\ ,,1,·t1 tJ hy octrtlon undrr Sc;
~~,,1\,

~, :\~h"(l\ \tn\ "' ,,,,. A \\mr-\,~rr("l debt lSc-c. 25(3)1, A tlme-h.1rre1.l

\h•\,, ,~l\tH'\ ht re\o,·cr(',\ .mJ th~rtfo1c a promi$e 10 r('rJy s\tch l Jeht
ts $,,h\ \\', \,~ ,,\tlwm ccin~iJ<'r4\tlon, 1'ut u An exctption nn a~rre-ment
m.h.\t \1\ w1 lun~ uthl ~l~nt,l hr th( drbt<'r or by hh authorl~r1.t a~~nt.
h\ ,\.\)' ,,hl,U)· ,,r In l'Att a Hmr•b~,1 rt,\ "tcht. ~arrC'J by the 1"~'' of
lln\lt4'\h.,n', h \'aHJ.
R~l\H,ltt '} for arrH\1\Ul'Il ('f thls tx~,'pll~,n are:
(,1) l'c~t ls mH·nfor\t'~Me onl)' for the rr~son of bc,omlng timt·•h,\rrt·~l
t\lr th) othtr rcas'-1n:
\\th\

(f,) \he rrl"mlh,r hlmstlf must bt Hable for the debt. So ll frrsh
rrvmhsOI')' note mun he ,xtcuttd b), him onl)1
(c) thtrc ll\ll$l be an 'cxprtu rrombt tor">'' a thnc-harttJ d(bt ttnd
not ~ mtrr \1ckno,\·ltdgmtnt of i llabllit)·: A dtbtor's lt'ttrr to his
', ,rt'\Hh,r
. \tl ,1wc rou , 10.000 l'Hl account of m}, tlme•bnrtd
,,n,mbsor)' note" h not ~ ,ontr~ct. There must be a ck,u ~nd
Ji~tincl rrnmbc to r.a)1 an~t
(11) tht rr\\tnist must bt in ,,·ritlng and slgncJ b)' the debtor or his
ilStnt. An oral 1~romlsc to rir a tlmc-burtJ dtbt h untnforctablf.
l C

(t) rrl,mht to r-'Y time-barred debt must be unconditlon~l. In K

/c",\\lr.l•tt.lrl \\ Stm,i.uurriJ!t.fostrirs L:,t. (:00,~), the Arrc-ll~nt n~re(1.\
ta ray the tlmc-bured debt onl)' nftcr rtcclving monc)' from
TamilnlJu Ekctridty Rom.t The ~bJr~s lli~h Court heM th.n 1\
ronditl~n.u promise rould not be constrned ns rromist undc"r S(('.
lS{)),
Tht uU~n"lc behlnd this t'Xctption ls that by l3pse of tlmc the d~bt i~
not ;de$lro)'td but only the rcmrdy ls lost, Under thls e~c('rtion the
rtnuJ)· gets rc,·h·cd b)· a n~\~ prof'{\lst.
'
Rr~:\tlv in K~t.i~ .\f.ihirtJ~ B.1nk Lt.I.\\ Ktw Prt:islonl\trts l)t ..
l.t,t. (~C,
.~ug. :oi2} tr.t ·"~i COW't catrgorinlly emphasl:t\i that •s~ 2~(3) is tttracteJ
only "-'htn th~rt ls txpru.1 rromist to r1y a debt l.,., lime barreJ or
-n-..t ltwc{U:n:.tlta"4."\ rtt"1tt--ts tht timt limn (fotd&.t!trtnt Nits) \\1Uun "'hi~~ an •~r!c,tJ rut)'
~'\ •;r~~ l~C ~rt fot ttdrtu&I Qr ju1U.;t. AC\.-orJin1 to lht Law c(Umlt&ti.')n,. dt~t" hl~h
ttelins \l.t~"' ~~.lmtJ fl)t I rtrloJ r:l t.~ )'Un bt\.-Offltt I U.:nt-bant.J debt ,r..i 111,,,t:r
a~ "°'"'C''"~k
3.6

nuslntss Laws
3.1 O erred
ther that "promise to pay can be Inf
any p3rt thereoff''. It also stated fur and
The promise should be clear
on scrutinizing the document.
unconditional': t given
let ~d gif t (gi ft ac tua lly ma de). Completed gift means gif
4. Co mp lly
ep ted . J\s be tw een the do no r and the donee, any gift actua
and. acc ~
be va lid an d bin din g eve n though without consideration
made wiU een the
nearness of relationsh\ ip betw
Natural lbve and affection or. ·, •
quisites of this except10n.
donor and donee are not pre-re
ag en cy , Sec . 185 of the Co ntract Act lays .?o'.A{,n that no
5. Contract of
ate an agency.
consideration is necessary to cre
the pro mi see , of pe rfo nn ance of tJ1e promis.e (Sec. 63).
6. Remission by.
s ag ree ing to ac ce pt Jess than what i,s due. Fo r
Remission mean ment to
necessary. Likewise, an agree
remission nc consideration is ~d by
d tim e for pe rfo rm an ce of a· CQ~tract need not be supp~rt
ex ten
'
consideration.
y
tio n to ch ari ty. Ge ne ral ly spe aking promise to donate mone
7. Contribu icial
ot be enfor~ed. But as pe r jud
lacks con$ideration and cann person
erp ret ati on s the re ma y be tw o types of situations (a) If a
int e
to co ntr i~u te to ch ari ty and on this faith the promise
promi ses ised
rta ke s a lia bil ity to the ex tent not exceeding. the prom
unde v. Gorie
bs cri pti on , the co ntr ac t shall b~ valid (Kadarnath
su came
ha mm ad ). In thi s cas e, the pro mise, even though gratuitous, be
Mo
ble be cau se on the fai th of the promise, s_ecretary had incurred
enforcea
t; (b) W he re the pro mi see has not done anything on the
a detrimen erable.
subscription is not legally recov
faith of the promise, promised bscribe
Ab du l Az iz vs Ma sum Al i the defendant promised to su
In een
t.o· a fun d sta rte d for reb uil din g a ·mosque· but no steps had-b
f 500 ble.
en to car ry ou t the rep air s. The defendant was held not lia_
tak
. !48 contract of bailment
may be
ba ilm en t. As pe r Sec
8. Contract o(
valid without consideration.

ei:at_ion. W hat are the essential elements of consideration .

1. Define· co~sid .,
rule _
plain the t~r ~ co nsideration and state the exceptions to the
2. Ex [B. Com, 20·16-17J
nside i'ation , No Co ntract '.
'No Co
 Co"sfdcrat/011
fil ..·
,,\.
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I f
Cons1dm1t1011 3 11

3. Consideration is a universal requisi t Of contracts. Comment

I , I •
.I.
e ! f
4. •Law will not enforce a promise I
given for no~hing' El.lborJl~ 1.,~t
I , ~ '
exceptions to this rule.
;
._,
5. n stranger to a con tra ct cannot sue' Discus~ this rule. Are there any
exception; to this rule? • ,
• \ [B. Com, 20 19·20}

'
6. "Consideration need not be ade
quate but it: m~~t have value in the
eyes of law". Explain.
•
•
7. "A stranger to the consideration I
can sue but ii: strnngcr to contract
cannot sut. Explain.
~ • [B. Com, 2021-22}
8. Explain the doctn~c of Privity of
1
Contract'.. •. [U. Com, 2021-22)
9. "Insufficiency of consideration is
immaterial b_ut an agreement without
consideration is void". Comment.
iB. Com (Hons) 20141
.
10. An agreement without consideration
is void.::Comment.
{B. Com (Hons) 2017}
11. Critically comment on the follow I

ing '

(a) Stranger to consideration can

sue provided he is party to contract.
ta·: Com (Hons) 20231
I

(b) Consideration is not needed

in promise ~o pay on account of •I1
natural love and affection.
:; ~ l B. Com, 2022-231
·'

1.A writes to B, at the risk of your own life

, you sa~ed me from a serious
accident. I promise to pay you~ 1,000.
A does: not pay. Advise B as to
his legal rights.
<: {B. Com, 2013-14)
(Hint: B is advised to file a ,uit for recove
ry ot.~•1,000. It is covered as
a promise to compensate for past volunt
ary sb;,ice.)
2. '/\ promises to give a gift o_f ~ 1,00 •
0 tq 'B' on ~is marriage. 'A' fails to
keep his promise. Can 'B' recC:ver the mo
ney?~
(Hint: 'B' cannot recover the money bec 1
ause there is no consideration
from 'B'. A gift made and accepted doe
s not~r~quire consideration.
 ' ''
• ' Bus111cu Le1w;
3 12
hou t con side rati on, is
~

How eve r, a ~r9 mis e to gift , bein g wit

void.)
. /
3 ,vt sold his hou se for t 5 lakh due to
pres sing financial nee ds. Can
the con side rati on was
he get bac k his hou se on the plea that
\
inad equ ate? :
. .)
(Hin t: No, con.sideration need not be adequate
-l X owed a sum ~f ts lakh to Y. The deb
t was barred by Limitation Act.
on acco unt of this tim e
X signed a wrjtten prom ise to pay ts lakh
barred. debt. ls it a valid contract?
• no contract.)
(Hin t: Yes, ex,e ptio n to no consideration,
5. A prornises to:give his fden d B a new
bike on his birthday. But doe s
not give. B wanfs to file a suit. Will he succeed?
. enforceable at law. Onl y
(Hin t: No, an Qgreement to make a gift is not
completed giff Lt., gift already given is valid.) '
:
app ear in Cou rt as witn ess. B a part y to case
6. A received sump1ons to
A be able to reco ver this
promised to ~ve him t 5,000 for this. Will
mon ey? ..
real.)
(Hin t: No, cohsideration is illusory and not '
. .. ,.
one who
7. X's hou se cat~ ¢d fire. X offered a reward off 1 lakh to any
ning hou se at that time . Y
would rescue ~ls son who was inside the bur
. Can Y claim the rew ard
a fireman, at a~reat risk of life rescued X's son
money?
~~ :.
dem and ed, this will be .
(Hin t: Yes, Y 9!d mo~e than what norm al duty
a good consideration, Ward v. Byham.)
- . red. to sell his car wor th
8. X who was ba~ly in nee d of i:noney, offe
r. Before car was deli vere d
~ l lakh to Y f.oi- t 10,000. Y accepted the offe
pers on and refu sed to
X received ari offe r. o( t 20.000 from ano ther
und of ina deq uac y of
carr y out th.i firs t con trac t ?n the gro
.
consideratio~. ·.Is X liable for damages? Explain with reas ons
...
long as con side rati on
~

(Hi nt: Yes, ~l}s liable to Y for damages. So

ade qua cy, pro vid ed it is
exists, the co~ tts are not con cern ed as to its
of value.) \ •
ol for the libr ary on the
9. Mr. A, agree~.· to give his hou se to a scho
I
r him . The man age men t
I con ditio n that the library would be named. afte
I
 - -

Considtriltlo,,
3 13
of the school accepted his condition. Later on Mr. A chan
ged his mi nd•
Could the management enforce the contract?
(Hint: Yes. consideration ls present in the form of nam
ing the school
after him.)
lO. Doctor demands extra fee for taking proper care
of a patient over and
above his usual fee. Patient agrees but later on refused to
pay extra fee.
Can doctor recover it?
(Hint: No, consideration being illusory. Refer to
Ramchcwdra
Cltintaman v. Kalu Raju.)
11. At the_risk of his life, A saved B from a serious
car accident. B promises
to pay, 10,000 to C (Son of A). Bdocs not pay. Can C reco
ver~ 10,000
from B? {B. Com (Hons) 2018}
[Hint: No, as the promise in above case is made to son of
A and not A,
therefore. not covered by exceptions under Sec. 25(2))
12. Harsh promised to pay , 10000 per month to
his wife Sunita for her
medical treatment. (l) Is the contract valid? (ii) Doe
s writing and
registration in any way affect the validity of the contract.
Explain.
• {B. Com (Hons) 2019]
(Hint: (i) No, (ii) Yes covered by exceptions under Sec.
25(1)]

13. A husband executed a re~istered document in

favour of his wife. After
referring to quarrels and alsagreement between them. he
promised to
pay for her separate maintenance and residence. On his
failure to pa)',
•the wife sues him in the court of law. Wlll she succeed?
(B. Com, 2017-18]
{Hint: No not covered by exception under Sec. 25(1) Refe
1
r Raj Lukhy
Dab(~ v'., Bhootnath)
14. /\s son caught in firf' and he announced a rewa
rd of~ 50000 to anyone
who saves his son. B saved tht child. Can he claim the
money? Will •
your answer be same if B comes to know about the offer
of re,..,•ard
after saving the child? I
(B. Com, 2021-22]
(Hint: Yes. he can claim the money. No, answer will not
be same if he
comes to know about the offer after saving the child]
 BtASirm, Law, • • J. ...
. t

3 14
t I

are True or False:

as ons whe ther th e following statements
State with re om1sor.
ve be en furnished at the desire of the pr
ust ha
J. Consideration m
be benefitted.
petson who gives consideration must
2. Th e I

done by the prom 1see only.

co nsideration m ust be
An act constituting
l ,.
3.
ust be adequate.
4. Consideration m
e value equivalent
to the value of the
us t ha ve th
5. Considerat io n m
[B, Com (Hons) 20
11]
T UAL C A P A
C O N TR A C
promise made. MEANING OF co
compettetont tont
eration cannot_ sue. 5 be co r
6 A stranger to consid ract m u l
Parties to a cont person is comptten
7 A stranger to co
ntract can sue. the Act "Every JOrity acco
natural love and ' e age O( lh e ma
f necessarily import (a) wh o 1s of th
relation by itsel
8. Nearness of sub;ect, and
affection.
d mind, ao<l
no consideration. (b) who is of soun
need b
9. Completed gifts d from contracting
on. (c) ,s not disqualifie
. Forb earanc e to sue is a good considerati • ma, nly de fi n
10 pacity 15
consideration. Thus. contractual ca o
a va lid contract without law to which a pers
11. Th ere ca nnot be
[B. Com (Hons) 20
13) mind and m terms of te nt to
s arc incompe
. ons) 2019) the following person
[B. Com (H
ge r' to a co nsid eration cannot sue. (1) Minors,
12. A stran s.
ar e free to m ake their own bargain unsound mind, and
13. The parties 19] (ii) Persons of
[B. Com (Hons) 20 w to
• cy of consideration
is .
• _ (iii) Persons di
squalified by any la
equa
nsider ation is required. ad
14. Presence of co [B. Com (Hons) 2023
] restricts above pe
The law in its wisdom
not required. (I0)-T,(11)-T, promises.
, (5)-F, (6)-F, (7)-F. (8)-F, (9)-T. responsibilities and
(3)-F. (4)-F
A ns : (l)•T, (2)-F. .
(12)-F. (13)-T, (14)-T MINOR
1
an Majority Act,
According to Indi
, 1999, a person, do
(Amendment) Act /
of age is a minor.
OR'S A G R E E
NATURE OF ~11N
parties to c
10 defines that the
Sec.
Indian Contract A
ct, 1872 declares