Consideration – Meaning, Definition and Essentials

Something is returning is meant consideration. Consideration definition and includes some right, interest, profit or benefit accruing to one party and some forbearance, detrainment, loss or responsibility given, suffered or undertaken by the other.

Relevant Provisions:

Section 2(d), 23, 24, 25, 127 and 185 of the Contract Act, 1872.

Meanings of Consideration:

Consideration means, “Something useful, like an act, forbearance, or a return promise, received by a promisor from a promisee”.

According to Black’s Law dictionary;

Consideration means, “The cause, motive, price or impelling influence which induces a contracting party to enter into a contract.”

Read More: Contract Law

Definition of Consideration:

According to Pollock;

“Consideration is that the price of which a promise is bought.”

According to Section 2(d) of the Contract Act, 1872:

The consideration definition is;

“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 promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise“.

Justice Paterson:

Justice Paterson says that consideration definition is as;

“Consideration means something which is of some value in the eye of law.”

Blackstone:

The consideration definition in Blackstone is as;

“Consideration is a recompense given by the contracted party to the other”.

Ingredients of Consideration Definition:

According to Section 2(d) of the Contract Act, 1872, the consideration definition has the following ingredients:

1). At the desire of the promisor:

It is the first element of consideration that it is the total privilege of promisor to fix the amount of consideration while forming a contract with another.

In other words, it means the consideration must be fixed by promisor and he cannot be compelled for increase and decrease of the consideration.

2). The promisee or any other person:

Consideration may proceed from the promisee or the other person.

3). Has done or abstained from doing(past consideration):

When an act has been done before the promise is made, at the desire of the promisor, it is called past consideration.

4). Does or abstains from doing(Executed Consideration):

Consideration which takes place simultaneously with the promise is called present consideration or executed consideration.

5). Promises to do or abstain from doing(Future consideration):

When the consideration on both sides is to move at a future date, it is called future consideration or executory consideration.

6). Something:

The word “something” indicates that this “something” must be of some value though not necessarily of pecuniary value.

An agreement to which consent of the parties has been fully given is valid even if consideration is inadequate.

7). Such act abstinence or promise is called a Consideration:

It will be observed that, according to the terms of the definition, it is only required that something should have been done for borne or promised at the request of the promiser. Consideration needs not be money only.

Essentials of Consideration:

There are certain essentials of consideration given below:

i). It must be real:

It means that it must not be uncertain, illegal, imaginary and not be physically impossible.

ii). It need not be adequate:

It is not necessary that consideration should be adequate. The law only insist on the presence of consideration. However, inadequacy of consideration may create a doubt about the free consent of the parties. But if consent is proved to be free, inadequate consideration is valid.

iii). Consideration must move at the will/desire of the promisor:

It means that consideration must be fixed by promisor and he cannot be compelled to increase and decrease of the consideration.

iv). It may move from promisee or any other person:

Consideration may proceed from promisee or any other person.

v). It may be past, present or future.

vi). It must be something that the promisor is not already bound to do:

Where a person is bound to do something and to perform the pre-existing contract for consideration is not valid.

vii). It must be lawful:

Consideration shall not be forbidden by law and it must not be immoral or opposed to the general public.

Kinds of Consideration:

Basically, there are three kinds of consideration.

1). Executed Consideration or Present Consideration:

Consideration which takes place simultaneously with the promise is called executed consideration or present consideration.

2). Executory Consideration or Future Consideration:

When the consideration on both sides is to move at a future date, it is called executory consideration or future consideration.

3). Past Consideration:

When an act has been done before the promise is made, at the desire of the promisor, it is called past consideration.

Exceptions of Consideration:

There is a general rule, according to section 25 of the contract act,1872, that an agreement made without consideration is void. However, the contract act contains certain exceptions also, where agreements are enforceable even without consideration. These cases are as follows:

1). Agreement for Natural Love and Affection/Gift:

The contract without consideration is valid if;

i). it is made out of love.

ii). it is in writing.

iii). it is registered with subregisteror.

iv). The parties stands in close relation to each other, i.e., father and son, brother and sister, doctor and patient.

2). Agreement to Compensate for past voluntary services:

If a promise is made to compensate a person who has voluntarily done something for the promisor, it may be enforced although there was past consideration.

3). Agreement to pay a time-barred Debt:

When a debtor or his agent promises in writing to pay the time-barred to pay the time-barred debt, the agreement is valid.

4). Contract of Agency:

According to Section of Contract Act,1872;

“No consideration is necessary to create a relation of an agency.”

Read here: Contract of Agency

5). Agreement to Remit a part of claim:

When a creditor agrees to remit or give up a part of his claim, then there is no need of consideration for such an agreement.

6). Contribution to charity:

A promise to contribute to charity has no consideration but it is a contract.

Conclusion:

It is concluded that consideration definition is that it is one of the essential elements to support a valid contract. When a party to an agreement promises to do something, he must yet “something” in return. If he does not yet “something” in return, the contract is not valid. This something is considered as consideration definition.

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