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The Law Of Contract 1872: Consideration In a Contract

Law Of Contract 1872: CONSIDERATION

 

INTRODUCTION:

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.

 

ESSENTIALS OF A VALID CONSIDERATION:

 

 

 

 

 

 

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.

ILLUSTRATIONS:

(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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