Contracts are governed by “general principals” and are usually derived from the common law

Contracts are governed by “general principals” and are usually derived from the common law-illustrate & explain

Introduction:

Consideration is always important in contract, because we never know how your actions will affect the other person. Also it shows we are a thoughtful person and always thinking of other consideration is one of the essential elements of a contract together with consent of the parties and object of the contract. It consideration is absent; there is no contract just like the absence of any of the other two elements. Offer and acceptance is subscribed within consideration, and when consideration is established, intention to create legal relation would ordinary be present.

Consideration in law is one of the three main building blocks of a contract. It can be anything of value, which each party to a legally binding contract must agree to exchange if the contract is to be valid. If only one party offers consideration in contract, the agreement is not legally a binding contract. In its traditional form, consideration is expressed as the requirement that in order for parties to be able to enforce a promise, they must have given something for it. Something must be given or promised in exchange or return for the promise. A contract must be met with or supported by consideration to be enforceable, also, only a person who has provides consideration can enforce a contract.

Definition of consideration: According to section 2(d) of the contract Act 1872, Consideration means ,when at the desire of the promisor, the promise 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 consideration.

Contract:

Contract word come from the “Latin work Constructs”. The terms of the contract, meaning, who, what where, when and how of the agreement, define the binding promises of each party to the contract. Contract is one type of agreement between two or more competent parties in which an offer is made and accepted, and each party benefits. The contract can be formal, informal, written, oral or just plain understood. A contract is an agreement creating and defining obligations between the parties. A contract is an agreement enforceable at law made between two or more persons, by which rights are required by one or more by to acts or forbearances on the part of the other or others.[1] Every agreement and promise enforceable at law is a contract. Contract is an agreement between two or more persons to do or to refrain from doing, a particular thing in exchange for something of value. Contracts can generally be written using formal or informal or informal terms, or they can be entirely verbal.

Classification: Consideration may be classified in to three types, these are as follows

  1. past consideration
  2. present consideration
  3. Future consideration

Past consideration: When the consideration of one party was given before the date of promise it is called past consideration. Past consideration is not a contract it is void contract.

Present consideration: consideration which moves simultaneously with the promise is called present contract.

Future consideration: when the consideration is moves at a future date. it is called future considerations . Thus a promise to pay money at a future date for goods to be delivered at future date is a valid contract.

a. Why is consideration important? Contract law relies on consideration to determine, of the many promises made each day, which should be legally enforced and which – i.e. those without consideration – should not.

b. How does the Restatement (Second) of Contracts (§ 71) define consideration?

i. To constitute consideration, a performance or a return promise must be bargained for.

ii. A performance of return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee inexchange for that promise.

iii. The performance may consist of

1. an act other than a promise, or

2. a forbearance, or

3. the creation, modification, or destruction of a legal relation.

iv. The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

c. Application, Hamer: Defendent, uncle’s executor, argued that Willie was not eligible to receive the $5,000 promised by his uncle because it was not an enforceable promise consisting of consideration, but a common-place gift. In particular, the defendant noted that while Willie received a benefit from the transaction – i.e. living a life free of vice – his uncle recieved nothing in return. The court held that allotment of the $5,000 was, indeed, enforceable, saying that consideration is met as long as one party to the agreement abandons a legal right in exchange for a promise. Willie for bore his right to smoke, drink, etc.

d. § 71 of the Restatement provide a framework that reiterates the court’s decision in Hamer. Consideration does not require mutual exchanges of a promise for a promise (in other words, a benefit for a benefit), but is also satisfied when performance is bargained for in exchange for a promise. This performance may include an act – promising to do something – as well as a forebearance

[1] Case: Lampleigh v Braithwait (1615), Case: Anderson v Glass (1869).

[1] Collect by the Commercial Law or Business Law – M. Ahammed, Page no. 14.

[1] See http://definitions.uslegal.com/p/past-consideration, February 27, 2012.

[1] CASE: Roscorla v Thomas [1842], CASE: Anderson v Glass [1869], CASE: Lampleigh v Braithwait (1615).

[1] Collect by the Commercial Law or Business Law – M. Ahmmed. Page no. 14.

The essentials elements of considerations: the following rules may be laid down regarding consideration

Desire of the promisor is essential: the Act done are lass offered by the promise must have beer done or suffered at the desire of the promisor An act done without any request is voluntary act and does not come within the definition of consideration.

Considerations must be legal: the consideration must have some values in the eye of law. It must not be same or illusory. The impossible acts and illusory or non-existing goods cannot support a contract.

Example: X promise to supply Y one tola of gold brought from the sun the consideration is sham and illusory and there is no contract.

Public duty: Where the promise is already under an existing public duty, an express promise to perform, of performance of that duty will not contract to consideration. There wil be no detriment to the promise of benefit to the promissor over and above there existing rights and liabilities.

Promise to a stranger: when a promise made to a stranger to perform an existing contract, is enforce able because the promisor undertaken a new obligations upon himself which can be enforce by the stranger.

Consideration need not to be adequate:

An agreement to which the consent of the party is freely given is not void Morley because the considerations is inadequate but the inadequate of the consideration may be taken into a court in determining was freely give s.

The consideration must not be legal immoral or opposed to public policy: if either the consideration of the object of the agreement is illegal, the agreement can not be enforced. The some principle applies if the consideration is immoral or opposite to public policy.

Consideration may moves from promise or from any other person: A person granted some properties to his wife C directing her at the same time to pay an allowance to his brother B .C also interest into an agreement with B. Promising to pay the allowance to B. this agreement can be enforce by B even though no part of the consideration received by C moved from B.

Case reference chinnaya vs Ramaya 1881

No consideration no contract: consideration is essential for the validity of a contract. But there are exceptional cases, where a contract is enforceable even though there is no consideration. These are as follows…

  1. Natural love and affection: According to section 256 of the contract act 1872, an agreement made without consideration is valid if it is expressed in writing and registered under the law for the time being in force for the registration of documents and is made an account of natural love and affection between parties standing in a near relation to each other.

An agreement without consideration is valid under this section only if the following requirements are fulfill.

  1. An agreement is made by a written document
  2. The document is registered according to the law relating to consideration is force at the time.
  3. The agreement is made on account of natural love and affection.
  4. The parties to the agreement stand are a near relation to each other.

Case reference: Rajlukhy debe vs bhootnath 1900. An agreement centred into by a husband promised to give some properly to the wife, the agreement is void because, under the circumstance there is no natural love and affection between the parties.

1Voluntary compensation: According to section 25(2) of the contract act 1872. A promise made without any consideration is valid if it is a promise to compensate wholly or in part a person who has already voluntarily done something for the promise or something which the promisor was legally compellable to do.

  1. Time –barred debt: According to section 25 (3) of the contract act 1872. A promise to pay wholly or in part a debt which is barred by the law of limitation can be enforced , if the promise is writing and is signed by debtor or his authorized agent
  1. Completed gift: the rules no consideration no contract. Does not apply to completed gift. Explanation 1. to section 25 states that . Nothing is this section shall affect the validity as between the boner and the done any gift actually made.

Unlawful consideration and object:

An agreement will not be enforced by the code if its object or the consideration is unlawful. By the expression object of an agreement, the object and consideration must both be lawful otherwise the agreement is void according to section 23 of the contract act 1872, the consideration and object of an agreement is lawful cases-

  1. It is forbidden by law: as act or an undertaking is forbidden by law when it is punishable by the criminal law of the country or when it is prohibited by special legislation or regulation made by a competent authority under powers derived from the legislature. If the object of an agreement or the consideration is the doing of an act forbidden by law, the agreement is void.
  1. If it is of such a natural that, if permitted it would defect the provision of any law; if the object or the consideration of an agreement is such a nature that it would indirectly lead to a violation of the law, the agreement is void.

Case refencce: Nappier vs National Business Agency ltd. (1951)-2 ALL E.R.264.

In the case the plaintiff entered into a contract of service with the dependent by which it was agreed that he should be paid the sum of $13 a week, as salary and a further $6 per week for expenses. His expenses were very much lower; therefore this probation was merely device to defraud the income tax authority. The court of applied in England held that the two provision of a contract can not be severe and the whole contract was void.

  1. If it is fraudulent: An agreement whose object is to defraud others is void for an example A,B and C enter into an agreement for the division among them of gains acquired or to be acquire by them by fraud. The agreement is void.
  1. If involves or implies injury to the person or property of another: if the object of an agreement is to injure the person or property of another, it is void.

Case reference: W.H smith and sons vs Clinton (1908) T.L.R.34 An agreement by the proprietors of a newspaper to indemmify the printers against claims arising from libels printed against claims arising from liables printed in the newspapers is void

  1. If the court regard it as immoral : An agreement whose object is immoral or where the consideration is immoral , is void for an example, X who is B , Mukthear promises to excerise his influence with B in favour of C and C promise to pay RS 1000 to X . the agreement is void because it is immoral
  1. If the court regards it as opposed to public policy: An agreement which is injourious to the public or is against the interests of the society. Is said to be opposed to public policy. Public policy is not capable of exact definition and there fore court do not usually go beyond the decided cases on the subject.

Opinion: Consideration is an essential element is a contract .it has some certain exceptions. Otherwise, an agreement is not enforceable unless each party to the agreement is not enforceable agreement gets consideration. Under Roman law an agreement without consideration was called a nutum pactum and was unenforceable. Under Indian law the presence of consideration is as a rule, essentialto the validity of contract. If the consideration must be lawful otherwise the agreement is void

CONCLUSION

Promises enforceable, despite the lack of consideration are, to pay a debt otherwise discharged by limitations, in rare cases and to charitable institutions. These situations are effect one contract and consideration.

When a promisor makes a clear and definite promise on which the promise justifiable relies, the promisor is bound by the promise, even if it was insufficient to form the basis of a valid, legally binding contract.

Promissory maintain requires the following elements are, The promise was clear and definite, justifiable relied on the promise, substantial and of a definite character and will serve the best interests of justice.

Book Recommendation:

    1. Commercial law – Arun Kumar Sen and jitendra Kumar Mitra.
    2. law of contract – Avtar Sing
    3. Law of contract – D.f Mulla
    4. Mercrntile Law – M.C Shukla
    5. Elements of mercantile Law – N.D Kapoor

[1] See Sir Willium Anson, Law of contract (1920).

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