Introduction• The price• For the promise or• The something given and• Obtained is called consideration• Consideration is something in return.• Something which is of some value in theeyes of law. (Valuable Consideration)
• Agreement is a mutual Exchange ofPromises.• One party makes the promise (For Doingor Not doing any thing)• Another party also makes similar Promise.
• Every Promisor gets something in returnof his promise from another party.• It may be a Right , interest , profit orbenefit , responsibility.• Whatever he gets will constituteconsideration for his Promise.
Example• A offers to sell his car to B for 5 Lacs.• B Accepts the offer.• There is the mutual Exchange of Promises(Obligation/Undertaking) between them.
• A is a Promisor for “ Handing overpossession and ownership of that car to B.• A in return of his promise gets right torecover Rs.5 lacs from B which Constituteconsideration for his Promise. Vice versa
It may be as Follows:• An act• Abstinence• PromiseForms of Consideration
ACT: Doing of SomethingExample:• A agrees to constructs B’s House for Rs:1 Million.• B’s Promise to Pay Rs: 1 Million is theconsiderationfor A’s promise ofConstructing the House. (Act)
ABSTINENCE: Refraining fromdoing Some Act• Forbearance to Exercise the legal Right,e.g.Example:• A promise not to sue B if B pays himAdditional Rs. 5,000.• The Abstinence of A is the Considerationfor B’s Payment.
Example• In return of Rs. 2 Million from a SportsGoods company a super star of cricketmakes a promise not to use bats otherthan manufactured by that company.• In this case Consideration for the othercompanies is in the from of Abstinence.• A super star has promised to abstain fromusing other bats.
PROMISE: From Both Sides• (A Promise by one party against thepromise of other party.Example:• A agree to sell his Car to B for Rs. 1Million.• B’s Promise to pay Rs. 1 Million is theConsideration for A’s Promise.• A’s Promise to sell the Car is theConsideration for B’s Promise.
• Any Act , Abstinences or Promise mayResult in Benefit , right or interest for oneparty and/or• Loss and obligation for another party.
Essentials of a Valid Consideration• It must move at the desire of the Promisor.• For valid Consideration it must be moveon the desire/ Request of the Promsior.• Not done voluntarily or without the requestof the promisor.
It must be real• Not valid if– Physically Impossible– Legally Impossible– Uncertain Consideration– Unreal consideration
Exception• Natural Love and Affection– In Writing , registered , Relationship , naturallove and affection.• Voluntary Compensation– To compensate• Time Barred Debt– Not claimed for a period of 3 years from thedate it becomes Due. Limitation Act 1908.
• Completed Gift– Possession is given.• Contract of Agency– Without charging any commission.• Remission by the Promisee– Less then what is due– Extended time for performance of a contract
UNLAWFUL CONSIDERATION ANDOBJECTS.• The object means the purpose of thecontract/agreement.• 1.IF IT IS FORBIDDEN BY THE LAWPunishable by lawExample: Goods obtained by the theftProhibited by lawExample: Sale without license
2.IF IT DEFEATS THE PROVISIONOF LAW.• Indirectly violate law• If permitted, it would defeat theprovisions of any law.Example: A fails to pay his loan to HBFC.A’s house is sold for Recovery of Debt. Ais prohibited from purchasing his house.