The Law Of Contract 1872: Consideration In a Contract


Law Of Contract 1872: CONSIDERATION



Consideration is one of the sixth essential element for the formation of a valid contract. It is simply the exchange of one thing of value for another. It must be legally sufficient and bargained for by the receiving party. SECTION 2(d) defines Consideration under the Indian contract act as “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.”


ILLUSTRATION: X promises to deliver 10 kgs of basmati rice to Y and Y promises to pay Rs. 500 upon delivery. In this contract, Y’s promise to Rs. 500 upon delivery is the consideration for X’s promise. Similarly, X’s promise to deliver 10 kgs of basmati rice is the consideration for the promise Y made.



  • IT IS GIVEN AT THE DESIRE OF THE PROMISOR: The action or abstinence from action must be done at the desire of the promisor. If the promisee has done something or abstains from doing something at the desire of a third party or voluntarily, it is not valid consideration. The consideration has to be done at the instance of the promisor or the promise will not be able to enforce the same.


  • IT MAY MOVE FROM ANY PERSON: It does not matter who furnishes the consideration. The consideration may be moved by the promisor himself or any other person including.


  • IT CAN BE PAST, PRESENT OR FUTURE CONSIDERATION: The considerations can be any type of considerations made for validating a contract based upon a consideration made earlier, or a consideration or promise taking place simultaneously or else if a consideration is made after a contract has been validated.


  • IT MUST BE REAL AND POSSES VALUE: Consideration must have some value in the eyes of law.


  • IT MUST BE SOMETHING OTHER THAN THE PROMISOR’S EXISTING OBLIGATION: Performance of an existing obligation or legal duty is no consideration for a promise.


  • IT MUST BE LAWFUL: The consideration must not be unlawful or opposed to public policy.


CONSIDERATION FOR GURANTEE: Section 127 of the Indian Contract Act defines consideration for a guarantee. It is as such: Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee.


(a) B requests A to sell and deliver to him goods on credit. A agrees to do so, provided C will guarantee the payment of the price of the goods. C promises to guarantee the payment in consideration of A’s promise to deliver the goods. This is a sufficient consideration for C’s promise.

(b) A sells and delivers goods to B. C afterwards requests A to forbear to sue B for the debt for a year, and promises that, if he does so, C will pay for them in default of payment by B. A agrees to forbear as requested. This is a sufficient consideration for C’s promise.

(C) A sells and delivers goods to B.A afterwards, without consideration, agrees to pay for them in default of B. The agreement is void.



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