This document discusses the concept of consideration in business law. It defines consideration as an act, abstinence, or promise given in exchange for a promise. Consideration provides evidence of an agreement between parties and makes a promise enforceable. Consideration can be executory, executed, or past. It must be real, lawful, and move at the desire of the promisor but need not be adequate. Without consideration, an agreement is merely a gratuity and unenforceable. The document outlines the essential elements of a valid consideration and provides examples to illustrate different types.

1. CONSIDERATION
BUSINESS LAW
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

2. OFFER & ACCEPTANCE
Proposal (or) offer [Sec 2(a)]
When one person signifies to another his willingness to do or
to abstain from doing anything with a view to obtaining the
assent of the other person to such act or abstinence, he is said
to make a proposal.
Promise [Sec 2(b)]
When the person to whom the proposal is made signifies his
assent thereto, the proposal is said to be accepted. A proposal
when accepted becomes a promise.
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

3. CONSIDERATION
Consideration [sec 2(d)]
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. Eg.: Money, Land
deed, goods, etc.
Agreement [Sec 2(e)]
Every promise and every set of promises forming
consideration for each other is an agreement.
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

4. CONSIDERATION
It is a legal evidence of the intention of the
parties to create a legal relation.
When a party promises to do something, he
must get something in return. A promise thus
given for value, is enforceable by law.
An agreement without consideration is called
a gratuity.
An agreement without consideration is void.
So, consideration is the price or a return for
a promise.
Eg. X agrees to sell a house to Y for
Rs.50,00,000. For X’s promise, the
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

5. TYPES OF CONSIDERATION
1.Executory or future consideration
 Promise to be performed in the future
 Eg. Babu receives a payment and promises to deliver goods in a
future date.
2.Executed or present consideration
 Consideration which takes place simultaneously with the
promise
 Eg. Raju purchases a shirt from a retail store and pays the price
immediately
3.Past consideration
 Consideration given before the date of promise
 Eg. Shalu does some work for Balu during January 2020 and
expects no payment. During December 2020, Balu promises to
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

6. ESSENTIAL ELEMENTS OF A VALID
CONSIDERATION
1. Consideration must move at the desire of the promisor.
2. Consideration must be real.
3. Consideration must be lawful.
4. Consideration may be an act to do something, or abstinence or a
return promise.
5. Consideration may be past, present or future.
6. Consideration need not be adequate.
7. Consideration must not be illegal, immoral or opposed to public
policy.
8. Consideration may move from the promisee.
S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM

7. S.M. GOLDYN ABRIC SAM, ASST. PROFESSOR, DEPT. OF MANAGEMENT STUDIES, NMCC, MARTHANDAM