Indian Contract Act 1872: What is Consideration?

What is Consideration?

When at the desire of the promiser, the promisee or any other person has done or abstain from doing or does or promises to do something, such act, or abstainance or promise is called consideration for the promise.

Types of Consideration

1. Executed or Present Consideration: In present consideration, one of the parties to the contract has performed his part of the promise, which constitutes the consideration for the promise by the other side it is know as present consideration.

EX: A lost his bicycle, he makes an offer of the reward of ₹200 to anyone to find his lost bicycle. B finds the lost bicycle and delivers to A. Here A is bound to but ₹200. The consideration, in this case is present consideration.

 

2 Executory or Future Consideration: In future consideration, one party makes a promise in exchange for the promise made by the other side. The performance of the obligation by each side is to be made subsequent to the making of the contract. Such consideration is known as Future consideration.

3. Past Consideration: In case of past consideration, the promiser had received the consideration before the date of the promise.

Rules governing consideration 

1. Every contract must be supported by a consideration, otherwise, it is formally void subject to some exception.
2. There must be mutuality.
3. Consideration must be real and not way indefinite or illusionary.
4. Although consideration must have some value, it need not be adequate.
5. Consideration must be lawful.

When Consideration not necessary

1. If it is expressed in writing and register and made out of natural love and affection between the parties standing in a near relation to each other.
2. If it is made to compensate a person who has already done something voluntarily for the promises or done something which the promiser was legally compellable to do.
3. Gift.
4. Promise to pay a barred debt.