Consideration:

Consideration is one of the essential elements of a valid contract. Consideration is a technical

term used in the sense of ‘quid pro quo’ i.e., something in return. When a party to an agreement
promises to do something. He must get ‘Something’ in return. If he does not get something in
return, the agreement becomes invalid. This something is defined as consideration.
Section 2(d) of the Indian Contract Act defines consideration as “ when at the desire of the
promisor, the promisee or any other person has done or abstained from doing, or does or abstains
from doing or promise to do or to abstain from doing, something, such act or abstinence or
promise is called a consideration for the promise”
Consideration consists of the following:
1. The act or abstinence or promise which forms the consideration for the promise, must be done
at the desire of the promisor.
2. It may be done by the promisee or any other person.
3. It may have been already done, or is the process of being done or may be done on a future date
i.e., consideration may be past, present or future.
4. It must be something to which the law attaches a value.
A agrees to sell his car to B for Rs.200, 000. Consideration from A’s side is Car and
consideration from B’s side Rs.200, 000.
A promise his debtor, B not to file a suit against him for one year, on B agreeing to pay him
Rs.2, 000 more. Here the abstinence of A is the consideration for B’s promise to pay extra
Rs.2, 000.
A father intends to sell a property in order to raise funds for his daughter’s marriage. His son
promise to pay Rs.50, 000 if father abstained from selling the property. The father accordingly
abstained from selling.
The forbearance of the father is the consideration for son’s promise to pay.
Essentials or legal rules of a valid consideration:
1. Consideration must move at the desire of the promisor :
It order to constitute a valid consideration, the act or abstinence or promise, forming
consideration, must move at the desire or request of promisor. Acts done or service rendered
voluntarily or at the desire of third party, will not amount to valid consideration so as to support a
contract. But it is not necessary that the consideration must be for the benefit of the promisor
himself. It may be for the benefit of any other person.
A sees B’s house on fire and helps in extinguishing it. A cannot demand payment for his service
because B never asked him to come for help.
A sees B’s house on fire. He calls his friend C and they together help in extinguishing the fire.
Afterwards A promise C Rs1, 000 for his help in extinguishing the fire.
This is a valid consideration as C has helped in extinguishing the fire at the request of A who is
the promisor now.
Durga Prasad Vs.Baldeo
Durga Prasad constructed certain shops in bazaar at the request of the collector of the town. The
shops were occupied by many merchants who promised to pay commission to D on articles sold
in the shop. One of the shopkeeper in the market B, failed to fulfill his promise, D filed a suit
against B.
It was held that the promise of B could not be enforced against him, because D constructed the
shops at the request of the collector and not at the request of B.
2. Consideration may be positive or negative:
As per the definition, consideration need not always be for doing some act. It can be for not
doing an act also.
A promises to pay B Rs. 1,000 on the delivery of certain goods. It is a positive consideration.
A does not make the payment andB wants to file a case against A for the recovery of the amount
due. Now A request B not to file a case against him for 2 months and promise to pay B Rs 2,500
more. B agrees. Here B’s promise is negative i. e., not to file a case for 2 months.
3. Consideration may be past, present or future :
Section 2(d) of the Indian Contract Act clearly indicate that , in India, consideration may consist
of something done or not in the past, done or not done in the present or promised to be done or
not done in the future. That means consideration may be past, present or future act or abstinence.
Consideration is said to be past when something was done or suffered at request of the promisor
before the date of the agreement.
A found B's purse. After a month B promised to pay Rs. 5 to A as reward for the service
rendered. B is paying Rs. 5 for past consideration.
Consideration is said to be present when it moves simultaneously with the promise.
A sells and delivers book to B and B instantly makes payment of the book.
Consideration is said to be future when for the present agreement, consideration from both sides
are to move at future date. It consists of an exchange of promises and each promise is a
consideration for the other.
A, a shopkeeper promises B, to deliver certain articles after three days and B promises to pay for
them on delivery.
4. Consideration may move from the promisee or any other person :
Under the English law, consideration must move only from the promisee. If the consideration
moves from any other than promisee, the promise cannot enforce agreement. Under the English
law, a stranger to consideration cannot sue on the contract.
Suppose A pays Rs. 1,000 to B, and in consideration of the payment, B promises to give a bag of
sugar to C. The promise of B to C cannot be enforced by C, because the consideration did not
move from C i. e., C is a stranger to the consideration supplied by A.
But under Indian law, consideration may move from promisee or any other person if promisee
has no objection. Thus as long as there is consideration for a promise, It is immaterial as to who
furnished it. Even a stranger to consideration can sue on a contract, provided he is party to the
contract. This called as ‘doctrine of constructive consideration’.
A contract is entered into between A, B, C, whereby A pays Rs. 500 to B for delivering one bag
of sugar to C. This contract can be enforced by C against B, though B has not paid
consideration, as he is party to the contract.

Chinnayya Vs Ramayya:
A, an old lady by a gift deed handed over certain property to her daughter with a direction that
daughter should make annual payment to A’s brother C as was done by A. On the same day
daughter executed a deed in favour of her maternal uncle,C agreeing pay the annuity.
Later on daughter refused to pay the annuity to C on the ground that no consideration has
moved from C. C filed a suit for of the promised amount.
It was held by the court that the words ‘ promisee or any other person’ in section 2 (d) clearly
shows that a stranger to a consideration may maintain a suit. Hence the maternal uncle, though a
stranger to consideration ( as the consideration move from his sister) was entitled to the promised
amount as there was a separate contract between him and his sister’s daughter.
5.Consideration must not be illegal or Unlawful :
Consideration must not be illegal or Unlawful. In other words, consideration must be lawful. If
consideration illegal or Unlawful, agreement is void and unforceable.
Consideration is considered to be Unlawful in the following cases:
1.When it is forbidden by law.
2. When it is such a nature that, if permitted, it would defeat the provisions of law.
3. When it is fraudulent.
4.When it involves or implies injury to the person or property of another.
5.When it is immoral.
6. When it is opposed to public policy.

6.Consideration need not be adequate :

It is true that consideration is necessary for the support of a valid contract and it should be of
some value in the eyes of law. But consideration need not be adequate to the promise.
Section 25 of Indian Contract Act clearly states that “an agreement, to which the consent of the
party is freely given, is not void merely because the consideration is inadequate”. The law only
insists on the presence of consideration and it should be of some value in the eyes of the law.
The law does not insist on the adequacy of consideration. The parties are free to decide the
amount of consideration. But 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.
A agrees to sell his car worth Rs 2,00,000 for Rs. 50,000 only. Here though the consideration is
adequate, the contract is valid if the consent of A is free.
7.Consideration must be real, and not illusory, impossible or uncertain:
Consideration must be real . It must be of some value in the eyes of the law. If it is physically
impossible, vague or legally impossible, uncertain and illusory consideration, the contract cannot
be enforced.
8.Consideration is said to be real in the following circumstances :
a. Forbearance or abstinence to sue:
A promise by a creditor not sue the debtor for a certain period is real and good consideration.
b. Compromise of a pending suit:
The compromise of a disputed or doubtful claim is a good consideration for fresh
agreement of compromise.
In the following cases the consideration is not real because of legal or physical
impossibility or uncertainty :
i. Physical impossibility
A promise to do something which is not physically possible.
E. g., to make a dead man alive is not enforceable as the consideration is physically impossible.
ii. Legally impossible :
A promise to follow something which is illegal, does not form a valid consideration.
iii. Uncertain
A promise to do something which is too vague or uncertain is no consideration in the eye of law.
8.Consideration is necessary for every contract :
An agreement which is not supported by consideration, is nudum pactum(a nude or bare
agreement), and ex nude pacto non oritur actio (no cause of action arises from a nude or bare
agreement). Bare promise cannot be enforced by law.
In the words of Salmond and Winfield, “ A promise without consideration is gift ; one made for
consideration is bargain”. A promise without consideration is a gratuitous undertaking and
cannot create any legal obligation, while a promise supported by consideration is a bargain and
create legal obligations. So consideration is necessary for every valid contract. A agreement
without lawful consideration is void.
Abdul Aziz Vs Masum Ali:
A promised B, the secretary of a Mosque committee, to subscribe a sum of Rs. 500 for rebuilding
a mosque. But he failed to pay promised subscription. B filed a suit against A for the recovery of
the promised subscription.
It was held by the court that there was no consideration either in the sense of any benefit to the
promisor, A or detriment or loss to the promisee, B and so, the agreement was void and
unforceable.