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this post is a part of our important question answer series on Contract Law.
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Answer
Consideration
is one of the most essential elements to conclude a contract.
Consideration means "something in return". Section 2(d) of
the Indian Contract Act, 1872 defines 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".
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The General
rule is that an Agreement without Consideration is Void. Section 25 of the
Indian Contract Act, 1872 deal with the exception to this rule. In such cases,
the agreements are enforceable even though they are made without
considerations. These cases are as follows:
1.
Natural
Love and Affection
If an agreement is in writing and registered
between two parties in close relation (like blood relatives or spouse), based
on natural love and affection, then such an agreement is enforceable even
without consideration.
Example: Aayush, in natural love and affection, promises to give his son Shivansh, Rs. 1,000. Aayush puts his promise into writing and registers it. This is a contract.
In the case of Rajlakhi Devi V. Bhootnath: Husband promised
to pay to his wife, after constant quarrels between them, a fixed monthly
amount for her maintenance and separate residence without any consideration.
The promise was in writing and registered. When he refused to pay, the wife
filed a case.
The
agreement was declared void by the Court on the ground that the
exception was not applicable as there was no natural love left between them.
Also visit: Understand Law with the help of differences.
2.
Compensation
for Voluntary services:
According
to Section 25(2), A promise to compensate, wholly or in part, a person who has
already voluntarily done something for the promisor, is enforceable, even
though without consideration.
Example: Aayush
finds Shivansh’s purse and gives it to him. Shivansh promises to give Aayush Rs.
500. This is a contract.
3.
Promises
to pay a time barred debt:
If a person
makes a promise in writing, signed by him, or his authorized agent about paying
a time-barred debt, then it is valid despite there being no consideration.
Example: Aayush
owes Rs 100,000 to Shivansh. He had borrowed the money 2 years ago. However, he
never paid a single rupee back. He signs a written promise to pay Rs 50,000 to Shivansh
as a final settlement of the loan. This is a valid contract.
4.
Gifts:
Gift is
transfer of property without consideration. In order to be valid a gift does
not require consideration. As per Explanation 1 to section 25, gifts given by
donor to donee are valid.
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5.
Creation
of an Agency:
According
to section 185 of the ICA, 1872, no consideration is necessary to create an
agency.
6.
Bailment
Section 148 of the ICA, 1872, defines bailment
as the delivery of goods from one person to another for some purpose. This
delivery is made upon a contract that post accomplishment of the purpose, the
goods will either be returned or disposed of, according to the directions of
the person delivering them. No consideration is required to effect a contract
of bailment.
7. Charity
If a person undertakes a liability on the promise of another
to contribute to charity, then the contract is deemed valid.
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