CONSIDERATION

“Consideration means something which is of some value in the eyes of law. It may be some benefit to the plaintiff or some detriment to the defendant”. 

Introduction

Consideration is one of the most important essentials of valid Contract. It is the foundation of every contract. It is the sign and symbol of a bargain. It is a legal evidence of the intention of the parties to effect their legal relation. When a party to an agreement promises to do something, he must get something in return of it. If he does not get something in return, the contract is not valid.

The word, ‘consider' is derived from the Latin term ‘Considerare’ and the meaning of the word consideration is ‘payment’ or 'reward’. Consideration is the normal ‘badge of enforceability’ for a contract. Subject to certain exceptions, an agreement is not enforceable unless each party to agreement gets something. This “something" is called ‘consideration'.

Consideration is a quid pro quo i.e. something in return.

Definitions

According to Tomlins Law Dictionary, “Consideration is the material clause, of any contract without which it will not generally be effectual or binding.

As per Blackstone, “Consideration is the recompense given by the party contracting to other”.

Justice Patterson says, “Consideration means something which is of some value in the eyes of law. It may be some benefit to the plaintiff or some detriment to the defendant”.

Section 2(d) of the Contract Act defines consideration as follows:

a. “When, at the desire of the promisor

b. the promisee or any other person

c. has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing,

d. something, such act or abstinence or promise is called a consideration for the promise.”

For Example : A promises B not to file a suit against him if he pays him Rs. 500. The abstinence of A is the consideration for B’s payment.

In the English case, Currie v. Misa, Consideration was defined as “some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other."

Abdul Aziz vs. Masum Ali
A movement having been set on foot for re-constructing a mosque, Mr. Abdul Karim & Mr. Jan Mohammed promised to subscribe Rs. 500 each. Mr. Abdul Karim was appointed treasurer of the committee for collecting subscriptions. Mr. Jan Mohammed gave a cheque for his promised subscription of Rs. 500, but owing, first, to some defect in the endorsement, and later onto its having become out of date, it was never cashed. The mosque also was never re-constructed . Mr . Abdul Karim having died, his heirs were sued by the members of the committee for the amount of the unpaid subscriptions.

It was held in this case that the promise was not enforceable because “there was no consideration in the sense of benefit”, as “the person who made the promise gained nothing in return for the promise made”, and the secretary of the Committee to whom the promise was made, “suffered no detriment as nothing had been done to carry out the repairs.”

Essentials of Valid Consideration

1. Consideration must move at the desire of the promisor:

The act or abstinence must be done at the desire of the promisor. If it is done at the instance of a third party or without the desire of the promisor, it is no consideration.
For Example : A sees B’s house on fire and helps to extinguish it. A cannot demand payment for his service because B never asked him to come for his help.

Durgaprasad vs Baldev -
D constructed a market at the instance of District collector. Occupants of shops promised to pay D a commission on articles sold through their shops. Held, there was no consideration because money was not spent by Plaintiff at the request of the Defendants, but at instance of a third person and hence void.

2. Consideration may move from the promisee or any other person.

Consideration may be supplied by the promissee or any other person. But the stranger to the consideration will be able to sue only if he is a party to the contract.
For Example : A, B and C enter into an agreement under which A pays Rs.1,000 to B and B agrees to build a house for C. Here C is a party to the contract but stranger to consideration and can enforce the contract.

Chinnaya v. Ramaya-
An old lady, made an agreement with her daughter that she would gift her some landed property but the condition was that the daughter would pay her aunt some amount regularly as maintenance allowance. The daughter promised her aunt (mother’s sister), the maintenance money. However, later she stopped paying the money to her aunt. The aunt filed a case against her niece for not paying the money. The decision was in favour as this was a perfectly valid consideration.
Held that When a promisor gives a promise, the promisee or any other person may provide a valid consideration in return.

3. Consideration may be an act or abstinence

A person may promise to do something or not to do something. To do or not to do something in return is consideration.
For Example : If A promises to give Rs. 10,000 to B, if B stops smoking, it will be a good consideration.

4. Consideration may be past, present or future

When the consideration of one party was given before the date of the promise, it is said to be past. 

Consideration which moves simultaneously with the promise is called present or executed consideration. For example- Cash sale.

When the consideration is to move at a future date, it is called future or executory consideration.
For example- A promises to B to deliver him 100 bags of sugar at a future date. B promises to pay price on delivery.

5. Consideration need not be adequate

Consideration need not be adequate nor equivalent to promise. However, Section 25 provides that inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.
For Example : A sells his car worth Rs. 100,000 to B for Rs. 1000 willingly. The agreement is a contract notwithstanding the inadequacy of consideration.

6. Consideration must be real and not illusory

Consideration must be real or of some value in the eyes of law. It should not be physically impossible or illegal or illusory or uncertain.

For example- to make a dead man alive.

7. Consideration must not be illegal, immoral or opposed to public policy

Consideration given for an agreement must be lawful one.
For example- A promises to pay Rs. 20,000 to B, if he kills C. This is not a valid contract as the consideration is given for illegal purpose.

8. Consideration must not be something which a person is already bound by law to do.

Discharging of pre-existing obligation is no consideration. A person may be bound to do something by law 

For example- to give evidence when called by the Courts. 

Performance of a legal obligation is no consideration for a promise and therefore the witness cannot demand money to give evidence. 

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