Written by:Adv. Pooja Gupta

Define Consideration and its Essential Elements ICA 1872

DEFINE CONSIDERATION INTRODUCTION AND ESSENTIAL ELEMENT IN INDIAN CONTRACT ACT, 1872: – One of the elements to support a valid contract is consideration. If a party to a contract intends to do something, something must be reimbursed. The contract is not valid if there is nothing in return. It is defined as “some” thoughts.

For instance, if x gives consent to sell his car to y, Rs. 60,000, the consideration for x’s promise to sell the car is y’s promise to pay Rs. 60,000, and the consideration for y’s promise to pay Rs. 60,000 is the promise of x to sell the motor car.


Definition of Consideration and its Essential Elements

The compensation paid by the contractor to the other party shall be considered……Blackstone

In accordance with Sec. 2 (d) of the I.C.A,1872, where the Promisor or anyone else has done or promised not to do or do anything. Such  restriction or promise is called a promise consideration.

The concept is based on the term ‘quid-pro-quo,’ which literally means ‘something in exchange.’ Then a person makes a promise to others with the intent of obtaining some benefit from the act or refraining from doing something called consideration.


The following are the idea’s essential or salient characteristics

Consideration must move in the direction of the promisor’s desire: In a contract, the promisor promises something to the promisor in exchange for a subsequent act or restraint. As a result, the promisee must only perform his part of the promise at the ‘will’ of the promisor.

Consideration on the promisee’s or anyone else’s behalf: If the counterparty has any objections, or if the promisor has any. It can also be transferred to a non-contracting third party. Under Indian law, the consideration does not have to be given solely by the promisee; it can be given by the promisee or any other person.

In this case, Chinnaya vs Ramaiah, ‘A’ gave his property to his daughter ‘B’ as a gift or deed, with the condition that ‘B’ pay an annuity to A’s brother ‘C’. ‘B’ agreed to pay her uncle the annuity in writing. She later refused to pay, claiming that she (B) received no consideration from ‘C’. The decision was taken to transfer consideration from one individual to another. As a result, ‘C’ was entitled to claim his suit.


Consideration can be:

  • Past
  • Present
  • Future

The words used in the definition of the idea given in the act clearly indicate this.

Past consideration:

A previous request must be replaced in order to support a promise. For instance – If a request b does the same to find out your watch & b. Now it will be considered after a promise b to give 100\-.

Present Or Performed Consideration:

In this Consideration, one party of the contract has completed his liability and the other must complete its liability. For example, a pays 1000 to b, and b promises to give him a certain amount of wheat within a month. Only b is responsible for carrying out his responsibilities in this situation. This is the present consideration

Future And Executor Consideration:

According to this viewpoint, both parties to the contract make a promise to each other for some future act or omission, i.e. both parties must fulfil their duty. For example, if rice costs Rs 1000-, an agrees to sell and b agrees to buy a quantity of keratin. The promise to sell by A and the promise to buy by B is a future consideration.


Consideration Must Be Valid Or lawful

The consideration or part of a contract is valid except if: it is prohibited by law; or it is of such a nature that it violates the terms of the agreement, if permitted, it would violate any law; or it is fraudulent; or it involves or causes damage to another’s person or property; or the court considers it to be immoral or against public policy. [sec.23]

For example, an agrees to give her daughter to b’s heir for concubinage ( cohabitation of persons not legally married). Even though the letting is not illegal, the agreement is void because it is morally unacceptable (Indian Penal Code, 1860).


Consideration adequacy/sufficiency

The consideration should not be substantive, but it should be genuine. There is no requisite that the consideration be of a specified amount. It does not seem to be of equivalent value to the commitment for which it is exchanged, but it must be something that the law considers valuable. In this case, Section 25 of the Indian Contract Act, explanation 2, states that an agreement/contract to which the promisee has freely given his consent is not void simply because the consideration is inadequate or insufficient.


Consideration Must Be Real And Not Illusory

When (i) it is lawfully or physically impossible to consider an act framing the act, it is said to be absolutely unbelievable and unreal. or (ii) it is uncertain or, if it seems to be present, it is actually absent, such as the act of a person who has already the legal obligation to perform. 

In terms of consideration,

The following differences exist between English & Indian law:

  1. Consideration must be transferred, according to English law, by the Promised One, that is, a stranger cannot sue under English law for consideration.

But according to Indian law, the third party and not necessarily the promisor himself can take the account and, when a stranger is a promiseor under it, he can sue a contract.

  1. Past considerations are not taken into account under English law

In India, however, past considerations are recognized as a valid consideration

  1. According to English law, if it is in writing and registered in force by law, a valid agreement does not require any consideration,

However, each agreement must be supported by consideration in Indian law in order to be valid

  1. A valid consideration under the English law has a value in the eyes of the law, and such natural love and love, etc., cannot be regarded as good consideration.

But natural love and affection in Indians can support an agreement


Read more: –

Laws related to Child Labour in India

Public Interest Litigation in India [PIL] with cases

The Principle of Natural Justice case Laws India

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