Why does the law enforce some promises but not others? One important reason is consideration—the value exchanged between the parties.
What Is Consideration?
Consideration means something of value given in return for a promise.
In simple terms:
“Something in return for something.”
It may be an act, a promise to do something, or a promise not to do something.
Example
A agrees to design a website for B for ₹15,000.
A’s service is the consideration for B’s promise to pay ₹15,000, and B’s payment is the consideration for A’s promise to provide the service.
Essentials of Consideration
1. It Must Move at the Desire of the Promisor
The act or promise must be done at the request of the person making the promise.
2. It May Be Past, Present or Future
Under Indian law, consideration may relate to:
- Past – an act already performed.
- Present – an act performed at the time of the promise.
- Future – a promise to perform something later.
3. It Must Be Lawful
Consideration cannot involve something illegal or against public policy.
4. It Need Not Be Adequate
The law generally does not require consideration to be equal in value to the promise, as long as it has some legal value.
For example, a person may sell a ₹10,000 item for ₹2,000 if the agreement is otherwise valid.
Is an Agreement Without Consideration Valid?
The general rule is:
An agreement without consideration is void.
However, the Indian Contract Act provides certain exceptions, such as certain promises made out of natural love and affection, promises to compensate for a past voluntary act, and certain written promises to pay a time-barred debt.
For exam, focus on the exception specifically provided in the question or passage.
Why Is This Important?
Consideration questions often test whether you can identify:
- What each party is giving or promising.
- Whether the consideration is lawful.
- Whether it was given at the promisor’s desire.
- Whether an exception applies.
Ask:
What is being promised? → What is being given in return? → Is it lawful? → Is it at the promisor’s desire? → Does an exception apply?
Practice Question
Principle: An agreement without consideration is generally void. However, an agreement may be enforceable where a person promises to compensate another for something that the latter has voluntarily done for them in the circumstances recognised by law.
Facts:
During a heavy storm, Arjun finds his neighbour’s lost dog and safely returns it to her. A week later, the neighbour promises to pay Arjun ₹2,000 for his effort. She later refuses to pay, arguing that Arjun had found the dog before she made the promise.
Which is the most appropriate conclusion?
A. The promise can never be enforced because the act occurred before the promise.
B. The promise may be enforceable as a promise to compensate for a past voluntary act.
C. The promise is automatically enforceable because every promise creates a contract.
D. The promise is void because finding a lost dog can never constitute consideration.
Answer: B
Explanation:
The act was voluntarily performed before the promise. Under the recognised exception relating to compensation for a past voluntary act, such a promise may be enforceable.
Consideration = Something of value in return for a promise.
Remember:
- Must be at the desire of the promisor
- Must be lawful
- Need not be adequate
- Agreement without consideration is generally void, subject to exceptions
Whenever you see a promise, ask: “What is being given in return?”
