2. Ruby Sharma 2
Meaning of consideration
Consideration means something in return.
According to sec.10 consideration is one of the
essential element of a valid contract.
Consideration is the foundation of every
contract. No consideration no contract.
A valuable consideration must result in the sense
of the law ,may consist either in some right ,
interest , profit or benefit accruing to one party.
According to section 25, “an agreement without
consideration is void but it is subject to certain
exceptions”.
3. Ruby Sharma 3
Essential of a valid
consideration
It must be given only at the desire of
the promisor. (Durga Parsad vs Baldeo)
It may be past or present or future.
It must be of some value.
It must be real and not
illusory(uncertain).
Something other than the promisor’s
existing obligation.
It must be lawful.
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Exceptional cases where agreement
without consideration are valid.
1. Agreement on account of natural love and
affection – Where an agreement is made on
account of natural love and affection between
the parties it is valid even without consideration
provided following conditions are satisfied: -
• It is expressed in writing.
• It is registered under the law.
• It is made only on account of natural love and
affection between the parties.
• The parties are standing in a near relation to
each other.
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Promise to compensate
voluntary service
2. A promise to compensate a person, wholly or in
part, is valid even without consideration, in the
following cases: -
• If the person has already voluntarily done something
for the promisor.
• If the person has done something which the
promisor was legally compelled to do so. E.g.. X,
supported Y’s infant son.Y promised to pay X’s
expenses in doing so. This is a valid contract. Here ,X
has done that act which Y was legally bound to do.
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Promise to pay a time barred
debt
3. A promise to pay a time barred debt
without consideration is also valid and
enforceable provided following
conditions are satisfied: -
a) It is made in writing
b) It is signed by the debtor
c) It relates to a debt which could not be
enforced by a creditor because of
limitation.
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4. Gift actually made: -
The gift actually made without consideration will
not affect its validity. A gift once actually made
cannot be recovered on the plea that it was void
for want of consideration.
5. Promise to charities: - A promise to contribute to
charity is enforceable by law because it is without
considerations.
6. Contract of agency-No consideration is required to
create an agency
