Consideration - Unit 2 Revision

Introduction

• Consideration means getting something in return in a contract.
• It is an essential element of a valid contract.
• Consideration is called something in return.

Key Points

1. What is Consideration:

• Essential Element under Section 10
• Meaning of Consideration: Expectation of sacrifice and something in return.
• Example: The example of shopkeeper and customer.

2. Legal Rules:

Desire of Promisor

• Consideration should be according to the desire of the promisor.
• Example: The example of the promisor and the shopkeeper.

Move from Promisee or Any Other Person

• Consideration can come from the promisee or any other person.
• Case Law: Chinnaya versus Ramayya.

3. Executed and Executory Contract

• Executed: Consideration given. (COD)
• Executory: Consideration promised. (Online order)

4. Past, Present, and Future Consideration

• Present and Future: Example (analysis of the past)
• Past Consideration: When one party has already done something.
• Example: Example of life saving.

5. Legal Rules:

Must Not Be Illusory

• Consideration should be real and non-illusory.
• Example: Demanding the moon and stars.

Not Bound to Perform

• Performance of what one is already bound to do by law cannot be consideration.
• Example: Postman, policeman.

6. Sued by Third Party to a Contract

Privity of Contract

• Only parties to a contract can sue each other.
• Example: Promisor and Promisee.

Exceptions

• In certain cases, a third party can sue:
  • Case of trust
  • Case of family settlement
  • Marriage contract
  • Assignment of contract
  • Acknowledgment and Estoppel
  • Covenant running with the land

7. Validity of Agreement Without Consideration

Exceptions

• Natural love and affection
  • Example: The case of Vikram and Vikrami.
• Past voluntary services
  • Example: Example of Bill Gates' daughter's saving.
• Promise to pay time-barred debt
  • Example: Selling goods on credit.
• Completed gift
  • Example: Giving a gift to Dhruval.
• Agency
  • Making someone an agent.
• Charity
  • Contribution and charity.
• Bailment
  • Gratuitous and non-gratuitous bailment.

---

Major Case Laws on Consideration

1. Chinnaya versus Ramayya
2. Durga Prasad versus Baldev
3. Sohanlal versus Mohanlal

---

Conclusion

• Consideration is an important element of a contract.
• In specific circumstances, a contract can be valid even without consideration.

Homework

• Write and practice today’s revised information.
• Read the noted points again and try to make a complete understanding.

Next Lectures: Will be covered in Unit 3.