Q. “Insufficiency of Consideration is Immaterial but an Agreement without Consideration is void.” Explain.

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Answer

According to Section 2(d), Consideration is defined 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 abstain from doing something, such act or abstinence or promise is called consideration for the promise".

 

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Further, A careful reading of section 25 of ICA provides that a contract without consideration is void-ab-initio. There must, therefore, be some consideration. but, Explanation 2 of the same section provides, it need not necessarily be adequate.

It should be noted that although the consideration need not be adequate, yet if there is an allegation that the consent of the promisor was not freely given, the inadequacy of the consideration may be taken into account by the court determining the question whether the consent of the promisor was freely given. In short, it can be said that although consideration need not be adequate, it must be real, competent and of some value in the eyes of the law.

As long as the court is satisfied that a person has entered into an agreement through his free will and has adequate knowledge of its effects, the agreement would stand valid notwithstanding the inadequacy of the consideration.

 

Illustration

Ash agrees to sell a horse worth Rs. 1,000000 to Kartik for Rs. 1,000. Considering that B’s consent was given freely then the agreement between the parties is a contract notwithstanding the inadequacy of the consideration. However, if Ash’s consent was claimed to not be freely given then the court would take into account the fact of the inadequacy of the consideration in determining whether or not his consent was freely given. 

 

 

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