An agreement without consideration is void

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An agreement without consideration is void

  1. 1. An Agreement without consideration is void." Explain this rule and state exceptions if any. UnlessIndian Contract Act 1872 in section 2(e) says that every promise and every set of promises that form a consideration for each other is an agreement. Thus, it is clear that the formation of consideration for a promise or promises is a key ground on which a promise becomes an agreement. There cannot be an agreement if there is no consideration. Section 25 of the act says the same thing in precise terms and also gives three exceptions when an agreement without consideration is a valid contract:Section 25: An agreement without consideration is void unless,<br />it is in writing and registered and the promise has been made due to natural love and affection between the parties standing in near relation to each other. <br />it is a promise to compensate, wholely or in part, a person who has voluntarily done something for the promisor or something that the promisor was legally bound to do. <br />it is a promise to pay for a time barred debt. <br />Natural Love and AffectionRajlukhy Debi vs Bhootnath Mukherji -  Court found no evidence of love.Bhiwa vs Shivram - A person gave half of his property to his brother in order to be reconciled with him. Court held that it was due to natural love and affection.<br />(2) Agreement Made Without Consideration-An agreement made without consideration is void, unless1)    it is expressed in writing and registered under the law for the time being enforce for the registration of(documents), and is made on account of natural love and affection between parties standing in a near relation to each other; or unless.2)    It is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promissory was legally compellable to do, or unless.3)    It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in the behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.In any of these cases, such an agreement is a contract.Explanation 1–Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.Explanation 2- An agreement to which the consent of the promisor is freely given is not void merely because the consideration may be taken into account by the court in determining the question whether the consent of the promisor was freely given.Illustrationsa)    A promises for no consideration, to give to B Rs. 1000; this is a void agreement.b)    A, for natural, love and affection, promises to give his son, B Rs. 1000. A puts his promise to B into writing and registers it. This is a contract.c)    A finds be B’s purse and gives it to him. B promises to give A Rs. 50. This is a contract.d)    A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a contract.  <br />Exceptions to the Rule “No Consideration No Contract”<br />The general rule of law is that an agreement without consideration is void. “A bargain<br />without consideration is a contradiction in terms and cannot exist.”* But there are a few<br />exceptional cases where a contract, even though without consideration, is enforceable. They<br />are as follows:<br />1. An agreement made without consideration is valid if—<br />(a) it is expressed in writing, and<br />(b) it is registered (under the law for the time being in force for registration of<br />documents), and<br />(c) it is made on account of natural love and affection, and<br />(d) made between parties standing in a near relation to each other.<br />Examples<br />(1) An elder brother, on account of natural love and affection, promised to pay the debts<br />of his younger brother. The agreement was put to writing and was registered.<br />Held : The agreement was valid [Venkatswamy v. Rangaswamy (1903) 13 M.L.J. 428].<br />(2) A Mohammedan husband, by a registered agreement promised to pay his earnings<br />to his wife.<br />Held : The agreement, though without consideration, was valid [Poonoo Bibi v.<br />Fyaz Buksh (1874) Bom. L.R. 57].<br />Notice that for an agreement to be valid under this clause, the agreement must be the<br />result of natural love and affection and nearness of relation by itself does not necessarily<br />import natural love and affection.<br />Example<br />A Hindu husband by a registered document, after referring to quarrels and disagreements<br />between himself and his wife, promised to pay his wife a sum of money for her<br />maintenance and separate residence, it was held that the promise was unenforceable<br />[Raihikhy Dohee v. Bhootnath (1900) 4. C.W.N. 488].<br />2. A promise made without consideration is valid if, “it is a promise to compensate wholly<br />or in part, a person who has already voluntarily done something for the promisor, or<br />something which the promisor was legally compellable to do” [Section 25 (2)].<br />* Lord<br />Void Contract<br />A contract that has no legal force or binding effect. <br />Acceptable alternative way of describing a void contract: <br />A contract that is nul. <br />A contract which is legally no good. <br />Notes on this term: <br />Some examples of void contracts are: <br />A contract which involves fraud in the execution. <br />A contract in which the subject matter becomes illegal. <br />A contract signed by a person under guardianship. <br />The subject of void contracts is studied in more depth in the chapters on capacity and conduct which invalidates mutual assent. <br />Void Agreement <br />Definition:Literally: Void means having no legal value and agreement means Arrangement, promise or contract made with somebody.  So void agreement means an agreement that has no legal value.Traditionally: “An agreement not enforceable by law is said to be void”. [Sec 2(g)]A void agreement has no legal effect. An agreement which does not satisfy the essential elements of contract is void. Void contract confers no rights on any person and creates no obligation.Example of void agreement: An agreement made by a minor, agreement without consideration, certain agreements against public policy etc. Agreement which become void: An agreement, which was legal and enforceable when it was entered in to, may subsequently become void due to impossibility of performance, change of law or other reason. When it become void the agreement ceases to have legal effect.  EXPRESSLY DECLARED VOID AGREEMENTThere are certain agreements, which are expressly declared to be void. They are as follows: (1)      Agreement by a minor or a person of unsound mind.[Sec(11)](2)      Agreement of which the consideration or object is unlawful[Sec(23)](3)      Agreement made under a bilateral  mistake of fact material to the agreement[Sec(20)](4)      Agreement of which the consideration or object is unlawful in part and the illegal  part can not be separated from the legal part [Sec(24)](5)      Agreement made. without consideration.[Sec(25)](6)      Agreement in restraint of marriage [Sec(26)](7)      Agreement in restrain of trade  [Sec(27)](8)      Agreement  in restrain of legal proceedings[Sec(28)](9)      Agreements the meaning of which is uncertain [Sec(29)](10)    Agreements by way of wager [Sec(30)](11)    Agreements contingent on impossible events [Sec(36)](12)    Agreements to do impossible acts [Sec(56)] <br />

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