CONSIDERATION AND VALID CONSIDERATIONIt is a essential element for formation of a valid contract .A contract is void witho...
For Ex-A agrees to sell his factory to B for Rs. 50,000. Here for A’s promise, the consideration is the price of his fact...
Essential elements of Valid or LawfulConsiderationA) Consideration may be an act to do something of doing  something.B) ...
G) Consideration need not be adequate.H) Consideration must be something which the promisor is not already bound to do....
Kinds of Consideration1) Present or Executed Consideration2) Past Consideration3) Future or Executory Consideration4) ...
1) Present or Executed Consideration-  A present Consideration is something which is already actually done . It is done i...
2) Past Consideration -A past consideration is something that is wholly done by the promisee even before making of the ag...
3) Future Consideration-A Consideration is said to be future when it is to be done in future.A future Consideration is al...
4) Unlawful Consideration1) When forbidden by law2) When defeat the provisions of law3) When they are fraudulent4) Whe...
5) Illusory or Unreal Consideration-When a consideration subsist in wards only & is physically or legally impossible to p...
Capacity of PartiesAll agreements are contracts provided that:  a) they are made by the free consent of parties.  b) thes...
As per section 11 declares the following persons tobe incompetent to enter into a contract:1) Minor- A person who has not ...
Agreement with the Minors:1) Agreement with or by a minor is absolutely void:  An agreement with a minor is not voidable b...
3) A minor can be a promisee :A If minor has carried out his obligations on entering into a contract, he gets every righ...
4) No restitution in agreements with a minor:If a minor receives any benefit or advantage under an agreement or a contrac...
5) Minors Insolvency-A minor cannot be declared as an insolvent because of his or her incapacity to enter into a contract...
6) No estoppels in the case of a minor -A minor can always plead minority & is not bound by his misrepresentation or frau...
7) Minor as a partner-A minor cannot be a partner or cannot enter into partnership contract as a partner. However , he ca...
8) A person working as a surety for a minor -Any person may stand as a surety for any liability incurred by a minor. Such...
9) Liability of minor for necessities -If the contracts are entered into for the supply of the necessaries of life and ot...
10) Responsibility of parents or guardians of aminor-Parents and guardians are not liable for any contract entered into b...
PERSONS OF UNSOUND MINDIdiots, lunatics, drunkards are considered as the persons of unsound mind.According to section 12...
            Types of unsound Mind(I) Permanent Unsoundness           (II) Temporary                      1) Illness    ...
Persons Disqualification from Contracting by the Law- Alien enemies Foreign sovereign, their diplomatic staff &  accredi...
FREE CONSENTAll agreements are contracts if they are made by the free consent of the [arties competent to contract, for a...
CONSENT IS SAID TO BE FREE WHEN IT IS NOTCAUSED BYCoercion- It is committing or threatening to commit, elements of physic...
Fraud- Fraud means any act by a party to a contract or with his connivance, by his agent with intent to deceive another p...
Misrepresentation-1) The positive assertion in a manner not warranted  by the information of the person making it, of wha...
           Mistake by Law-Mistake by Law                                                     Mistake of fact             ...
Unilateral Mistake- Where one of the parties to acontract is at mistake about the value or quality ofthe subject matter & ...
Bilateral mistake-When both the parties to anagreement are under a mistake, there is said to bethe bilateral mistake & if ...
VOID AGREEMENT-1) Agreement by incompetent parties2) Agreement made under mutual mistake of facts3) Agreement, the conside...
CONTINGENT CONTRACTS – CONTRACTS ARE TWOTYPES1) Absolute contracts- In an Absolute contracts a promiser binds himselfto pe...
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Concideration

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Concideration

  1. 1. CONSIDERATION AND VALID CONSIDERATIONIt is a essential element for formation of a valid contract .A contract is void without consideration.According to Sir Pollock-” Consideration is the price forwhich the promise of the party is brought”. 11
  2. 2. For Ex-A agrees to sell his factory to B for Rs. 50,000. Here for A’s promise, the consideration is the price of his factory i.e. Rs. 50,000 and for B’s promise, consideration is A’s factory 22
  3. 3. Essential elements of Valid or LawfulConsiderationA) Consideration may be an act to do something of doing something.B) Consideration may be past, present or future.C) Consideration must be real & not illusory.D) Consideration should move at the desire of the promisor.E) Consideration may move from any person including the promisee.F) For supporting each independent promise, there 33 must be an independent consideration.
  4. 4. G) Consideration need not be adequate.H) Consideration must be something which the promisor is not already bound to do.I) Consideration must be valuable in the eyes of laws. 44
  5. 5. Kinds of Consideration1) Present or Executed Consideration2) Past Consideration3) Future or Executory Consideration4) Unlawful Consideration5) Illusory or Unreal Consideration 55
  6. 6. 1) Present or Executed Consideration- A present Consideration is something which is already actually done . It is done in response to some promise by the promisee. In this, one party has already performed its part of the promise while the other party has to perform its part of the promise. 66
  7. 7. 2) Past Consideration -A past consideration is something that is wholly done by the promisee even before making of the agreement. It is always supported by the future promise.EX- X was an infant & at his desire, Y provided him certain essential commodities. After attaining the majority X promises Y to compensate for what Y did in the past. 77
  8. 8. 3) Future Consideration-A Consideration is said to be future when it is to be done in future.A future Consideration is always a promise to do or for bear or suffer at a future date only. 88
  9. 9. 4) Unlawful Consideration1) When forbidden by law2) When defeat the provisions of law3) When they are fraudulent4) When cause injury to other persons or their property5) When opposed to public policy 99
  10. 10. 5) Illusory or Unreal Consideration-When a consideration subsist in wards only & is physically or legally impossible to perform a promise, such consideration is known as illusory or unreal. 1010
  11. 11. Capacity of PartiesAll agreements are contracts provided that: a) they are made by the free consent of parties. b) these parties must be competent to contract c) the contract must be for a lawful consideration and with a lawful object d) they must not be expressly declared to be void 1111
  12. 12. As per section 11 declares the following persons tobe incompetent to enter into a contract:1) Minor- A person who has not completed his 18th ofage is considered to be minor in the eyes of law & hisminority a) where a guardian of a minor’s person or property isappointed by the court under the Guardians & Ward Act1890. b) Where the property of a minor is taken over by thecourt of wards for management under the Court ofWards Act 1212
  13. 13. Agreement with the Minors:1) Agreement with or by a minor is absolutely void: An agreement with a minor is not voidable butabsolutely void ab initio.2) No Ratification of Minor’s contract: A minor’sagreement or contract cannot be ratified by him when hebecomes a major. A consideration given by a personwhen he was a minor is no consideration in the eye of law& therefore a consideration given under earlier contractcannot be implied into the contract which the minorenters on attaining majority. Minor can enter into a freshcontract on attaining majority. 1313
  14. 14. 3) A minor can be a promisee :A If minor has carried out his obligations on entering into a contract, he gets every right to bring a suit against the other party for the enforcement of the other party’s obligation.Suppose , if a minor delivers some goods under a contract a sale of Mr. X & if Mr. X does pay, the minor is entitled to bring a suit for the recovery of the price of the goods sold. 1414
  15. 15. 4) No restitution in agreements with a minor:If a minor receives any benefit or advantage under an agreement or a contract which is void, he cannot be asked or compelled to pay the amount benefit received.Ex- suppose a minor gets a loan from a money lender by mortgaging his property neither a minor nor his property can be held liable for recovering the loan given to him. 1515
  16. 16. 5) Minors Insolvency-A minor cannot be declared as an insolvent because of his or her incapacity to enter into a contract . He cannot be held personality liable even for necessities of life. 1616
  17. 17. 6) No estoppels in the case of a minor -A minor can always plead minority & is not bound by his misrepresentation or fraudulent behavior the rule of estoppels is not applicable against minor. 1717
  18. 18. 7) Minor as a partner-A minor cannot be a partner or cannot enter into partnership contract as a partner. However , he can be admitted to the benefit of the partnership firm already in the existence with the prior consent of other partners. Even though he is admitted to the benefit of the partnership firm, he does not get any right to participate in the management of the firm or inspect the books of the firm. 1818
  19. 19. 8) A person working as a surety for a minor -Any person may stand as a surety for any liability incurred by a minor. Such person is held responsible to a minor’s creditor but not a minor. 1919
  20. 20. 9) Liability of minor for necessities -If the contracts are entered into for the supply of the necessaries of life and other necessary services, all such contracts are valid and a minor is liable to pay out his property for the same. 2020
  21. 21. 10) Responsibility of parents or guardians of aminor-Parents and guardians are not liable for any contract entered into by a minor; even though the contracts entered into are for the supply of necessities and essential services to a minor. 2121
  22. 22. PERSONS OF UNSOUND MINDIdiots, lunatics, drunkards are considered as the persons of unsound mind.According to section 12 “ A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes a contract, he is capable of understanding it & of forming a rational judgment as to its effect upon his interest. A person who is usually of unsound mind , but occasionally of unsound mind, may make contract when he is sound mind. A person usually of sound mind but occasionally of unsound mind may not make a contract when he is of unsound 2222
  23. 23.  Types of unsound Mind(I) Permanent Unsoundness (II) Temporary 1) Illness 2) Shock 3) Accidental 4) IntoxicationCongenital Non-congenitalRight from birth Accidental Disease 23
  24. 24. Persons Disqualification from Contracting by the Law- Alien enemies Foreign sovereign, their diplomatic staff & accredited representative s Insolvents Convicts Corporations 24
  25. 25. FREE CONSENTAll agreements are contracts if they are made by the free consent of the [arties competent to contract, for a lawful consideration and with a lawful object & are not hereby expressly declared to be void. Thus a free consent is one of the essentials of a valid contract. 25
  26. 26. CONSENT IS SAID TO BE FREE WHEN IT IS NOTCAUSED BYCoercion- It is committing or threatening to commit, elements of physical pressure any act forbidden by the Indian Penal Code.Undue influence- It is a mental which is put upon the other party to the contract. 2626
  27. 27. Fraud- Fraud means any act by a party to a contract or with his connivance, by his agent with intent to deceive another party thereto or his agent1) The suggestion as a fact of that which is not true by one who does not believe it to be true.2) The active concealment of fact by one having knowledge or belief or the fact.3) A promise made without any intention of performing it.4) any other act fitted to deceive.5) Any such act or omission as the law specially declares to be fraudulent. 27
  28. 28. Misrepresentation-1) The positive assertion in a manner not warranted by the information of the person making it, of what which is not true though he believes it to be true.2) Any breach of duty which without an intent to deceive, gains an advantage to the person committing it or any one claiming under him , by misleading another to his prejudice, or to the prejudice of any one claiming under him.3) Causing however innocently a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement. 28
  29. 29.  Mistake by Law-Mistake by Law Mistake of fact Unilateral Mistake Bilateral MistakeMistake of theLaw of the country Mistake of Law of the foreign country Mistake as to possibility Mistake as to of Performing the contract the subject matter regardingExistence Identity Quantity Quality Subject Matter Title Price 29
  30. 30. Unilateral Mistake- Where one of the parties to acontract is at mistake about the value or quality ofthe subject matter & about understanding the terms& conditions effects of the agreement known as unilateral mistakeFor Ex- X sells his motor car to Y for an intendedamount of Rs. 95,000 but by mistake, he informs Yin writing the price of a car as Rs 85,000 . X cannotplead mistake as his defense to avoid theagreement
  31. 31. Bilateral mistake-When both the parties to anagreement are under a mistake, there is said to bethe bilateral mistake & if a mistake is bilateral theagreement is void.
  32. 32. VOID AGREEMENT-1) Agreement by incompetent parties2) Agreement made under mutual mistake of facts3) Agreement, the consideration or object of which is unlawful4) Agreement, the consideration or object of which is partly unlawful5) Agreements entered into without any consideration6) Agreements made in restraint of marriage7) Agreements made in restraint of trade, business, occupation8) All agreement s, the meaning of which is not certain9) Wagering agreements10) Agreement contingent on impossible events11) Agreement to do an act impossible in itself.
  33. 33. CONTINGENT CONTRACTS – CONTRACTS ARE TWOTYPES1) Absolute contracts- In an Absolute contracts a promiser binds himselfto perform an act or whatsoever without any condition or conditions.Ex – X agrees to sell Y his cycle for Rs. 500 on 5th August 2008 the contract isabsolute. In contingent contract a promisor agrees to perform a particular act at thehappening of a particular event. If the event does not happen, the contract is notenforceable

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