{"id":9264,"date":"2023-10-30T08:48:37","date_gmt":"2023-10-30T03:18:37","guid":{"rendered":"https:\/\/gstguntur.com\/?p=9264"},"modified":"2023-10-31T17:42:33","modified_gmt":"2023-10-31T12:12:33","slug":"consideration-ca-foundation-law-notes","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/consideration-ca-foundation-law-notes\/","title":{"rendered":"Consideration \u2013 CA Foundation Law Notes"},"content":{"rendered":"

Browsing through Consideration \u2013 CA Foundation Law Notes<\/a> help students to revise the complete subject quickly.<\/p>\n

Consideration \u2013 CA Foundation Business\u00a0Law Notes<\/h2>\n

What is Consideration?<\/strong>
\n\u2192 Consideration is an essential element in a contract. It is the normal \u2018badge of enforceability\u2019. Subject to certain exceptions, an agreement is not enforceable unless each party to agreement gets something. This \u201csomething\u201d is called consideration. It is also called as \u201cquidpro quo\u201d<\/p>\n

\u2192 A promise without consideration is called nudum pactum. The law will not enforce a bare promise (nudumpactum) but only a bargain ie. promise supported by consideration.<\/p>\n

\u2192 According to Pollock \u201cConsideration is the price for which the promise of the other is bought\u201d. Consideration is also defined as the \u2018element of exchange in a contract\u2019.<\/p>\n

\u2192 In the English case, Curie v. Misa (1875) L.R Ex. 153 consideration was defined as \u201csome right, interest, profit or benefit accruing to one party, or some forbearance, detriment loss or responsibility given, suffered or undertaken by the other\u201d. In simple words, consideration is \u2018a benefit to one party or a detriment to the other\u2019.<\/p>\n

\u2192 Section 2(d) of the Contract Act define consideration as follows:
\n(a) \u201cWhen, at the desire of the promisor,
\n(b) the promisee or any other person
\n(c) has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something,
\n(d) such act or abstinence or promise is called a consideration for the promise.\u201d<\/p>\n

\"Consideration<\/p>\n

Essentials Of Valid Consideration:<\/strong>
\n1. Consideration must move at the desire of the promisor:
\nThe act or abstinence must be done at the desire of the promisor. If it is done at the instance of a third party or without the desire of the promisor, it is no consideration. In Durgaprasad v. Baldev 1880 3 ALL 221, the plaintiff, baldev, at the desire and request of the collector of the town expanded money in the construction of a market in the town. Subsequently the defendants, Durgaprasad & ors. Occupied the shops in the market.<\/p>\n

Since the plaintiff had spent money for the construction of the market, the defendants in consideration thereof, promised to pay to plaintiff, a commission on the articles sold through their (defendants) shops in that market. Defendants however, failed to pay the promised commission, the plaintiff brought an action to recover the promised commission. It was held that they were not bound to pay as it was without consideration and hence void)<\/p>\n

However, consideration need not be to the benefit of the promisor. In Kedarnath v. Gorie Mohamed (1886) ILR 14 Cal 64, on the strength of the promise of the defendant to give donation the plaintiff started the construction of town hall.<\/p>\n

It was held that the defendant was liable to pay as the construction work started by the plaintiff was done at the desire of the defendant (the promisor) so to constitute consideration. However, if the plaintiff that is promisee did not incurred any liability on the promise of the donation then the defendant is not liable (Abdul Aziz v. Masum Ali, 1914).<\/p>\n

2. Consideration may move from the promisee or any other person:
\nConsideration may be supplied by the promisee or any other person. But the stranger to the consideration will be able to sue only if he is a party to the contract. The leading case is of Madras High Court in Chinnaya v. Ramaya (1882) 4 Mad 137.<\/p>\n

An old lady (A) had a highly valued estate. She made a contract with her daughter (R) that the whole of the property shall be gifted to R if R agrees to pay annuity to C (C was the sister of A). R made a contract with C agreeing to pay C annuities.<\/p>\n

After the death of A, R stopped the payment of annuities on the ground that no consideration had passed from C to R and therefore agreement between C and R was void. The Court held that the consideration had been furnished to R (since the property was gifted to R at the desire of R). It was immaterial that A had furnished this consideration. As long as there is consideration in a contract, it is immaterial as to who has given this consideration.<\/p>\n

3. Consideration may be an act or abstinence:
\nA person may promise to do something or not to do something for a promise. To do or not to do something in return is consideration. If A promises to give ? 10,000 to B, if B stops smoking, it will be a good consideration.<\/p>\n

4. Consideration may be past, present or future:
\nWhen the consideration of one party was given before the date of the promise, it is said to be past. Past consideration means the consideration for a promise given by a party before the promise is made.<\/p>\n

It is the consideration given earlier by a party and the promise is made thereafter. Such a consideration given by a party must be at the desire of the promisor. Past voluntary services rendered by a party cannot be said to be the past consideration.<\/p>\n

Example:
\nA requests B to search out his lost cow. B searched out and deliver the cow to A. thereafter A promises to pay B \u20b9 500 as a reward. Here, the efforts to B at the request of A constitutes a valid past consideration for the promise by A to pay 1500 to B. The consideration by B was given before the promise to pay is made by A.<\/p>\n

Consideration which moves simultaneously with the promise is called present or executed consideration. Cash sales are good examples of present or executed consideration. The seller delivers the articles sold and the buyer simultaneously pays the price of them. When the consideration is to move at a future date, it is called future or executory consideration.<\/p>\n

Example:
\nX promise to deliver to Y certain electric appliances as soon as he receives them from the wholeseller at Bombay and Y promises to pay \u20b9 5,000 against the delivery of the articles. Here is future consideration which is to be performed by both the parties when supplies are received from Bombay.<\/p>\n

5. Consideration need not he adequate:
\nConsideration need not be adequate nor equivalent to promise –
\nIllustration:
\nA agrees to sell his horse worth \u20b9 1,000 for \u20b9 10 only. The consideration is valid though inadequate, as there is something of value to be given by the buyer (Attached to Sec. 25).<\/p>\n

However, Sec. 25 (Explanation 2) provides that 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.<\/p>\n

6. Consideration must be real and not illusory:
\nConsideration must be real or of some value in the eyes of law. It should not be physically impossible or illegal or illusory for e.g. to make a dead man alive.<\/p>\n

Instances of good consideration:<\/p>\n