Consideration

CONSIDERATION        

Section 2 (d) DefinitionWhen At the desire of the promisor, Promisee or any other person Has done or abstained or, does or abstains or promises to do or to abstain from doing Something Such act, abstinence or promise is called consideration for the promise.

Every Contract consists of two parts:  

promise and consideration for the promise.

Promises are often made in return for a promise, for example, a buyer purchases the goods for a price. Price for the promise is consideration here. Promise for a promise in return is 'consideration'

RULES RELATING TO CONSIDERATION 

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Consideration must move at the desire of the promisor. Consideration may move from the promisee or any other person. Consideration may be past, present or future. Consideration may be an act of doing or abstaining from doing something or it may be an act of forbearance or abstinence. Consideration need not be adequate. Consideration must be real and not illusionary. Consideration must not be unlawful, illegal, immoral or opposed to public policy.

Importance of Consideration 

According to Section 25 an agreement without consideration is void

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Exceptions: Agreement made on account of natural love and affection.[Section 25(1)] Promise to compensate for past voluntary services. [Section 25(2)] Promise to pay a time-barred debt. [Section 25(3)]

1. 2. 3.

CARLILL V/S CARBOLIC SMOKE BALL CO. 

FACTS The defendant company manufactured a drug called ‘smoke balls’ and claimed it to be anti-influenza. It published an ad in newspapers saying that any person who consumes smoke balls 3 times a day for 2 weeks and yet being attacked by influenza will get a reward of pounds 100. Mrs. Carlill consumed smoke balls as directed but unfortunately got an attack of influenza. She, therefore, claimed the reward from the company. The company refused.

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1. Is the advertisement an offer or an invitation to offer? 2. If it is an offer, who is the offeree? Can the offer be made to the whole world at large? 3. Is the offer too vague to materialise into a valid contract? 4. Was there any communication of acceptance from Mrs. Carlill? 5. What was the consideration from Mrs. Carlill?

ESSENTIALS OF A VALID CONTRACT SECTION 10  All agreements are contracts if they are made  with free consent  of parties competent to contract  for a lawful object and lawful consideration; and  are not expressly declared to be void

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PARTIES COMPETENT TO CONTRACT SECTION 11, 12 Persons who are majors (persons who have completed 18 years of age), and Persons of sound mind A person is said to be of sound mind for the purpose of making a contract, when he is capable of understanding it and forming a rational judgement as to the effects of the contract upon him.

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EXPLANATION

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1. A person usually of sound mind but occasionally of unsound mind, cannot make a contract when he is of unsound mind.

CONSENT  SECTION 13  Two persons are said to consent each other when they agree upon the same thing in the same manner. FREE CONSENT  SECTION 14  A consent is said to be free when it is not caused by 1. coercion 2. undue influence 3. Fraud 4. Misrepresentation 5. Mistake 

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