THE CONCEPT OF CONSIDERATION UNDER THE INDIAN CONTRACT ACT

THE CONCEPT OF CONSIDERATION UNDER THE INDIAN CONTRACT

ACT

To have an overview of the concept of consideration, under the Indian Contract Act, 1872 reference to section 2(d), 10 and 25 of the Indian Contract Act, 1872 is required. Section 2(d) of the Indian Contract Act, 1872 states the “sense” of the word consideration as:

“When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”

The Indian Contract Act, 1872 makes it amply clear by virtue of section- 25 of the Act, that agreement without consideration is always void, unless it falls under any of the exceptions given under it.

The essentials of the concept of consideration, under the Indian Contract Act, 1872 can be laid as follows:

a) Consideration must be supplied on the request or desire of the offeror or promisor and nobody else.

b) Consideration may be supplied by the acceptor or by any other person.–The law of United Kingdom is different in this respect, as it says that the consideration must “only” be supplied by the acceptor.

c) Consideration may be in the form of any act or omission.

d) Consideration may be past, present or executory. However, in United Kingdom, past consideration is always void.

e) Consideration must have some value in the eyes of law.

f) Consideration must be lawful and legally enforceable in the Court of law.

g) Anything done in pursuance of an existing contractual duty in lieu of some
additional payment is no consideration in the eyes of law.

Along with differences between the English law and Indian law on the concept of consideration, another important area of interest for the researcher is to analyse the “sense” of the expression under the Indian Contract Act, 1872.

It is humbly submitted that according to the researcher, the nature of the “sense” as given under section 2(d) of the Act, 1872 is procedural and not substantive. It fails to state the future, fluctuating aspect of the consideration, which is of great relevance under the contract of indemnity and guarantee.