The term consideration is defined in Sec. 2 (d) of the Indian contract Act as “When at the desire of the promisor, the promise or any other person has done or abstained from doing, or promises to do or to abstain from doing something, such act, abstinence or promise is called a consideration for the promise.”

1. Consideration
Legal Environment of Business

2. Prepared By
Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com
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3. Definition
The term consideration is
defined in Sec. 2 (d) of the
Indian contract Act as “When
at the desire of the promisor,
the promise or any other
person has done or
abstained from doing, or
promises to do or to abstain
from doing something, such
act, abstinence or promise is
called a consideration for the
promise.”

4. Definition
• Consideration is the
backbone of all promises.
• Consideration means
something in return to
the promisor.

5. Essentials of consideration
• Consideration must move
at the desire of the
promisor.
• Consideration may move
from promisee or any other
person.
• Consideration may be past,
present or future.
• Consideration need not be
adequate.

6. Essentials of consideration
• Consideration must be real
and not illusory.
• Consideration must be
lawful.
• Consideration must be
something which the
promisor is not already
bound to.

7. Essentials of consideration
• Consideration must move
at the desire of the
promisor.
– Example – X’s son is missing
and Y voluntarily goes in
search for him. Y cannot
claim any remuneration or
reward for finding out X’s
son because he has not
done it at X’s request.

8. Essentials of consideration
• Consideration may move
from promisee or any other
person.
– Example – In Chinnayya Vs
Rammayya, it was held that
consideration moving from
third party is also good
consideration.

9. Essentials of consideration
• Consideration may be past,
present or future.
– Example – X’s son was
rescued from drowning by Y
on 15th August at the
request of X. Subsequently
on 17th, X promised to pay
Rs 500 for the service
rendered in the past. Y’s
consideration in this case is
past consideration.

10. Essentials of consideration
• Consideration may be past,
present or future.
– Example – X agrees to look
after the child of Y and he
further agrees to receive all
expenses incurred by him
from Y at the end of the
year. In this case,
consideration is a future one
for X.

11. Essentials of consideration
• Consideration need not be
adequate.
– Example – A agrees to sell
his horse worth Rs 25,000 to
B for Rs. 1000. The contract
is valid provided A’s consent
was freely obtained.

12. Essentials of consideration
• Consideration must be real
and not illusory.
– Example – A promises to
shift a mountain from one
place to another if B paid Rs
10,000. A’s promise is
physically impossible of
performance.

13. Essentials of consideration
• Consideration must be
lawful.
– Example – Where A
promises to obtain an
employment for B in the
public service and B, in
return promises to pay Rs.
1000 to A, the agreement is
void as the consideration is
unlawful.

14. Essentials of consideration
• Consideration must be
something which the
promisor is not already
bound to.
– Example – A is paid salary
for doing a job. So he is
bound to do the job. But a
promise to pay another sum
of money for doing the job is
without consideration.

15. Different Kinds of consideration
• Present consideration –
When consideration is given
simultaneously with
promise, ie at the time of
promise, it is said to be
present consideration.
– Example – Cash sales.

16. Different Kinds of consideration
• Future consideration – A
consideration is said to be
future consideration when it
is done in future or yet to be
complied with.

17. Different Kinds of consideration
• Past consideration – When
consideration for a present
promise was given by party
in the past, ie before the
date of promise, such a
consideration is a past
consideration.
– Example – A has already
rendered some service to B
and B now makes a promise.

18. • Definition of Consideration.
• Essential elements of a valid Consideration.
• Kinds of Consideration.