This document outlines the essential and legal rules for a valid consideration in a contract. It defines consideration as something given in exchange for something received, or a quid pro quo. There are several rules for consideration to be valid: it must move at the desire of the promisor, it can move from the promisee or third party, it can be past, present or future, it need not be adequate but must be real, it must be lawful, it cannot be something the promisor is already obligated to do, and it can be positive or negative. Examples are provided to illustrate each rule.

1. ESSENTIAL AND LEGAL RULES FOR VALID
CONSIDERATION
D.JEBASELVI ANITHA

2. CONSIDERATION
MEANING
Consideration is “Which for What” – something that a person gives
for something he receives.
Quid-pro-quo means something in return
Example:
Anand agrees to sell a house to Bala for Rs.5,00,000. for Anand’s
promise, the consideration is Rs.5,00,000. for Bala’s promise, the
consideration is the house.

3. ESSENTIALAND LEGAL RULES FOR A VALID CONSIDERATION
 The consideration must move at the desire of the promisor
 The consideration may move from the promisee or any
other person
 The consideration may be past, present or future
 The consideration need not be adequate
 The consideration must be real and illusory
 The consideration must be lawful
 The consideration must be something which the promisor
is not already bound to do
 The consideration may be either positive or negative

4. THE CONSIDERATION MUST MOVE AT THE DESIRE OF THE
PROMISOR
The act shall not be a good consideration for a promise unless it is
done at the desire of the promisor.
Example:
Mr. Balu sees Mr. Mohan’s house on fire and helps to put off the
fire. Here Mr.Balu cannot claim any reward for his service
because it was a voluntary act and was not done at the desire of
Mr. Mohan.

5. THE CONSIDERATION MAY MOVE FROM THE PROMISEE OR
ANY OTHER PERSON
A person can sue on contract, even if the consideration for the promise
moved from a third party.
Example:
Chinaya v. Ramayya, (1881) A, by a deed of gift, made over certain property
to her daughter, with a direction that the daughter should pay an annuity to
A’s brother. On the same day the daughter executed a deed in writing in
favour of the brother and agreed to pay the annuity. After that the daughter
declined to fulfil her promise and the brother sued to recover the amount.
The defendant (sister) contended that as there was no consideration from the
side of brother, and that he being the stranger to the consideration had no
right to sue. It was held that it is not necessary that consideration must move
from the promisee himself.
Therefore, the brother was entitled to
maintain the suit.

6. THE CONSIDERATION MAY BE PAST, PRESENT OR FUTURE
(A) Past Consideration: It is something wholly done, forborne or
suffered before making of the agreement.
Example: Charu found Sheela’s diamond ring and gave it to her. Sheela
promised to pay Rs.10,000 as a reward for her service.

7. THE CONSIDERATION MAY BE PAST, PRESENT OR FUTURE
(B) Present Consideration(Executed):
Consideration which moves simultaneously with the promise .
Example:
Balu receives Rs.2,00,000 in cash from Chandru in return of his Car
which he promises to deliver to Chandru.

8. THE CONSIDERATION MAY BE PAST, PRESENT OR FUTURE
(C) FUTURE CONSIDERATION( Executory):
When the consideration from one party to the other is to pass
subsequently to the making of the contract.
Example:
Anil agreed to sell her scooter after two weeks at an agreed price.
Bheem agreed to pay the price on delivery.

9. THE CONSIDERATION NEED NOT BE ADEQUATE
Consideration is something in return. This something in return need
not, necessarily be equal in value with something given. The law only
insists on the presence of consideration and not on the adequacy of it.
Example:
Sasi agreed to sell her laptop worth Rs. 50,000 for Rs.25,000 to Rani.
Sasi’s consent to the agreement was freely given. This will not affect
the validity of the contract.

10. THE CONSIDERATION MUST BE REALAND ILLUSORY
Consideration need not be adequate to the promise, but it should be
competent, real and valuable in the eyes of the law.
Example:
Ram promises to put life in the dead body 0f Banu’s son for
Rs.2,00,000 , this agreement is void because of the physical
impossibility of the performance.

11. THE CONSIDERATION MUST BE LAWFUL
The consideration to a promise must be lawful.
The consideration is unlawful if:
 It is forbidden by law
 Fraudulent
 Implies injury to person or property
 Immoral act or opposed to public property etc.

12. THE CONSIDERATION MUST BE SOMETHING WHICH THE
PROMISOR IS NOT ALREADY BOUND TO DO
A person may be bound(responsibility) to do something by law.
Consideration should be more than what the promise is bound to do
either according to law or on the basis of contract.
Example:
The defendant offered a reward to anyone who should give
information leading to the conviction of a thief. The plaintiff, a police
constable gave such information. It was contended that the plaintiff
being a police constable was bound to procure the arrest of criminals
and there was no consideration for the promise.

13. THE CONSIDERATION MAY BE EITHER POSITIVE OR
NEGATIVE
The consideration may be promise to do something (positive)or
abstain from doing something(negative).
Example:
Positive consideration : Anu requested Balu to sell the tractor on
credit. Balu agreed to do so provided Gopi will give guarantee for the
payment of price of tractor supplied to Anu by Balu. Here selling of
tractor by Balu to Anu is the consideration for Gopi’s promise to
guarantee the payment.
Negative consideration: Kala has taken a loan from her friend Mala.
However, she has not repaid the loan yet. Mala promises not to file a
suit against Kala if she promises to repay the loan within a week.

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