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    Saturday, 18 March 2017

    Concept of consideration as expounded by the Contract Act


    When, at the desire of the promisor the promisee or any other person who has done or abstained from doing, or does or abstains from doing, or promises to do or to abstained from doing, something, such act or abstinence or promise is called a consideration for the promise. Section 2(d)

    At the desire of the promisor
    The word "at the desire of the promisor" in S.2 do not necessarily contemplate a promisor who, at the time, possesses contractual liability.

    Essentials of consideration

    Consideration is what moves from the promisee whether it be an advantage to the, promisor or a detriment suffered by the promisee where parties have lawfully entered into mutual commitment, whit open eyes and free volition, maturing into contractual obligation; such cannot easy be allowed a unilateral and, willful disclaimer.

    Consideration must be conducive to contract
    The words 'at the desire of the promisor' imply a promise which has a real effect in conducing the contract.

    At the desire of third party
    Where a person advanced money to the son on an undertaking given by his father and obtained promissory notes for the amount advanced, it was held that those pronotes were without consideration inasmuch as the advances were not made at the desire of the son who was the promisor under the pronotes.

    Consideration need not be to the benefit of the promisor
    If the promisee does some act by which a third person is benefited which he would not have done but for the promise, the consideration is sufficient. Therefore guarantees executed in favour of plaintiff against loan advanced by plaintiff were good consideration.

    Consideration may proceed from third party
    The consideration for a promise need not necessarily move from the promisee but may move from a third party. In marine insurance broker's undertaking to pay premium consideration though it moves from a third person.

    Compromise as consideration

    The compromise of doubtful rights is a sufficient basis of and forms a sufficient: consideration for the agreement. A. compromise is an agreement to put an end to a dispute and to terminate or void litigation, and real consideration is not a sacrifice of right but an abandonment of a claim.

    Consideration to one compromiser is consideration to all

    Consideration paid to one of several joint promisors is sufficient consideration to support a promise to pay made by others.

    Reciprocity is not necessary
    Reciprocity of obligations is not of the essence of consideration. An act done of forbearance made in return for a unilateral promise is a sufficient consideration to support the promise.

    Inadequate consideration
    A smaller sum of money advanced can validly constitute consideration for acceptance of liability to a bigger amount by the debtor.

    Absence of consideration
    A meritorious and a gratuitous consideration such as natural love and affection or obedience and submission by way of respect cannot be good consideration or valuable consideration.

    Proof of consideration
    Where the document is silent in regard to consideration, but recites the particular consideration which induced the party to execute the document it will not be competent for the party to show that in addition therefore, but on which the document there was some other document therefore, but on which the document is silent. But recital in contract that the vender has received consideration can be him, by proving a collateral agreement to the effect that money was to remain it the vendee for a specific purpose.

    a. Onus of proof
    Onus of proving that there was no consideration rests on the person who denies it. When execution of a document and receipt of consideration has been admitted at the time of registration, the burden of proving non-receipt of consideration falls upon the party who makes such allegation.

    b. Who can challenge payment of consideration?
    The law does not allow strangers who have no interest at stake to intermeddle with the affair of other persons. Hence no stranger can challenge a transaction on the ground of want of consideration.

    Future promise as consideration

    A promise to do something in future is legal consideration. A promise so long as it remains executor will not amount to consideration on the eye of the law unless it involves a legal obligation which the promisor could be compelled to perform. But where it involves no such obligation its execution alone will constitute sufficient consideration.
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    Item Reviewed: Concept of consideration as expounded by the Contract Act Rating: 5 Reviewed By: Usman Ali
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