“Consideration in law is one of the three main building blocks of a contract” Discuss.


The term consideration is given to the subject that is exchanged in a contract. The most common and obvious exchange is money for goods or service. Consideration means making an agreement to pay for goods or services. Consideration is always important in contract, because we never know how your actions will affect the other person.

The most important part is integral parts of the contract. Consideration is most integrating part on the contract. Consideration is one of the essential elements of a contract together with consent of the parties and object of the contract. Consideration in law is one of the three main building blocks of a contract. It is absent; there is no contract just like the absence of any of the other two elements. 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. 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.

Offer and acceptance is subscribed within consideration, and when consideration is established, intention to create legal relation would ordinary be present. If only one party offers consideration in contract, the agreement is not legally a binding contract. 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. If an agreement is made to pay for goods or services upon receiving them, than the contract becomes binding at the point of agreement, not at the point of making payment, the consideration then referred to as being executor. Also it shows we are a thoughtful person and always thinking of other.



Contract word come from the “Latin work Constructs”. The terms of the contract, meaning, the who, what where, when and how of the agreement, define the binding promises of each party to the contract.[1] 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.[2] 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.[3] 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.

For example, if someone offered to drive you to work on Mondays and Tuesdays in exchange for your promise to return the favor on Wednesdays and Thursdays, a Bilateral Contract would be formed binding both of you once you provided consideration by accepting those terms. But if that same person offered to pay you $10 each day you drove him to work, a unilateral contract would be formed, binding only upon the promisor until you provided consideration by driving him to work on a particular day.[4]


Consideration is one of the essential elements of a valid contract (sec10). The fact of its existence serves to distinguish those promises by which the promisor intends to be legally bound from those which are not seriously meant. In the words of Blackstone: ‘A consideration of some sort or other is so necessary to the forming of a contract, that a nudum pactum or agreement to do or pay something on one side, without any compensation on the other, will not at law support an action; and a man cannot be compelled to perform it. The law supplies on means nor affords any remedy to compel the performance of an agreement made without consideration. If I promise a man $100 for nothing, he neither doing nor promising anything in return or to compensate me for my money, my promise has no force in law. The breach of a gratuitous promise cannot be redressed by legal remedies. It is only when a promise is made in return of ‘something’ from the promise, that such promise can be enforced by law against the promisor. This something in return is the consideration for the promise.

Section2 (d) of the Indian Contract Act defines consideration as follows:

“ When at the desire of the promise, 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 a consideration for the promise.”

 Importance oconsideration in the law of Contract:

It is perhaps dangerous to make broad general comments on a book of this nature, containing as it does fifteen distinct essays. Nevertheless, certain aspects are worthy of note. As already stated, the participants were encouraged to analyse “doctrines considered tangential or antiquated”. It is no surprise, then, that several essays focus on the doctrine of consideration: a doctrine mysterious to those who do not come from a Common Law background. The doctrine is clearly alive and well. One of the leading texts on English contract law, Treitel’s The Law of Contract, edited by Edwin Peel and now in its twelfth edition, devotes just over 100 pages to the doctrine. Its existence poses problems on a wider scale: as we march towards the further Europeanisation of contract law, it throws into question the possibility of further harmonisation. Clearly this doctrine continues to shape the leading theories applied to contract law in Common Law systems. Stephen Waddams, in his contribution, “Principle in Contract Law: the Doctrine of Consideration”, provides a useful summary of the doctrine, in all its fragmented glory. Waddams also explores the link between consideration and contracts for the benefit of third parties. He suggests that statutory reform in England has not met with success and summarises the difficulties involved in the creation of a workable third party right. This may lead the Scottish reader to admire his or her own version, the jus quaesitum tertio, but lament the fact that it is so under-used.[5]

 Considerations for contract:

The above juridical development deprived European private law of the most obvious explanation for the nature of many transactions. It is a fact that, while we normally expect to receive something in exchange for what we give, there are also many occasions on which we undertake duties without being able to compel a counter-performance from anyone For such transactions, the best explanation is that they constitute a unilateral promise, such a promise being a declaration by which one party commits itself to some future performance in favour of another, and to which *I.C.L.Q. 462  commitment it binds itself as a result of that declaration alone. All legal systems wish to recognize, in some types of circumstance, the efficacy of such unilateral promises, but they often do so by forcing promise to wear the borrowed clothing of contract. This not only distorts a proper understanding of contracts, but it displays a lack of honesty about why liability is being imposed, for the reality is that it is being imposed because the promisor has unilaterally bound himself by his declaration of will to undertake a specific performance. Nothing else is needed by way of explanation, and attempts to explain liability by reference to fictional acceptances of such promises, or by an assertion that it is detrimental reliance which is being protected, are an unhelpful and misleading addition. That at least is the thesis advanced here, though it is freely admitted that adoption of such a thesis would cause most European legal systems some degree of realignment, especially those with a requirement of mutual consideration for contracts.[6]

Consideration in contract:

In English consideration, a potential purchaser of land under an option might very well be seen as having provided consideration for the option by, for instance, instructing a survey to assess the suitability of the land for an intended purpose. In the absence of some type of consideration however, no matter how strained or convoluted it may be, a gratis option (such as that in the example) is clearly invalid. Where options are validly created in English law, they are conceived of a species of so-called ‘unilateral contract’, as they create binding duties on only one party. As unilateral contracts they are said to transform into bilateral or synallagmatic contracts once the option is exercised.19 So English law, in trying to describe a unilateral obligation, has to give it the clothing of contract in order for it to be accommodated within the Common Law obligational model.[7]

Types of Consideration:

There are mainly three types of consideration, and those are:

1. Present consideration

2. Future consideration

3. Past consideration

Present consideration: Present consideration is which promise is done by present.

Suppose- I want to go to Dhanmondi, that’s why I go to bus stand, to the bus counter I told the counterman, give me a ticket to dhanmondi, he told me give money  and I give him the money and he give the ticket to dhanmondi. It is a present consideration.


Future consideration: is what we promise to exchange, we exchange it in future.

Suppose-   A and B made a promise that, A will buy B’s car at cost $1000 after 15 days. And it is a future consideration.

Past consideration: it means “What I have done before but I get payment right now”. And I don’t expect it.

Suppose- My relative gives me a work to do before. And I have been done it that time. Right now my relative gives me some money now which I am not expecting.

In three cases past consideration for a promise does suffice to make the promise binding.

  1. Bill of exchange
  2. Recovery of a dept
  3. Service made on request.

Rules of consideration in contract:

  1. Consideration must move at the desire of the promisor: In order to constitute legal consideration, the act or abstinence forming the consideration for the promise must be done at the desire or request of the promisor. Suppose A sees B’s house on fire and helps in extinguishing it. He cannot demand payment for his service because B never asked him to come for help.
  2. Consideration must be real: In the eye of law the consideration must be real. It must not be sham or illusory. Suppose Y promises to supply X one tola gold of gold from the moon. The consideration is sham and illusory and there is no contract
  3. Consideration must be Reasonable: The consideration must be reasonable. Without a good reason it will not be a contract.
  4. The consideration must not be illegal, immoral or opposed to public policy: If the consideration of the objective of the agreement is illegal, the agreement cannot be enforced. Suppose A and B make an agreement that B will kill C for 1lakh taka. It will not be a consideration.
  5. Present, past and future: In the consideration present past and future consideration must have to be available, without this three it will not a consideration.
  6. From the promises or any person: Consideration need not move from the promises alone but may proceed from a third person.

 No Consideration NO Contract:

A promise without consideration is a wanton undertaking and cannot create a legal obligation.

 Consideration for a particular promise exists where some right, interest, profit or benefit accrues to the promisor as a direct result of some forbearance, detriment, loss or responsibility that has been given, suffered or undertaken by the promisee. Contract is an exchange of promises between two or more parties to do or refrain from ding an act which is enforceable in a court of law.

Contract out of love and affection, “If agreement made without consideration is void unless it is expressed in writing and registered under the law for the time being enforce for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other.”[8]

Contract for repayment of time barred debt, “If agreement made without consideration is void, unless it is a promise in writing and signed by the person to be charged therewith or by his agent generally or specially authorized in that he half, to pay wholly or in part a debt of which the creditor might have enforce payment but for the law of limitation for suits.”[9]

Contract of remission or waiver of rights, “Every promise may dispense with or remit, wholly or in part the performance of the promise made to him or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.”[10]

Contract for appointing agent, “No consideration is necessary to create an agency.”[11]

An agreement made without consideration is void. It means that consideration is a must in all cases.[12]


The objective of Law is order, and the result of order is that men are enabled to look ahead with some sort of security as to the future. More importantly, the objective of law is I have made this report about consideration which is most impregarding the future. In addition I mention this report full Law of contract but especially contract. Without consideration cannot make a contract. Moreover, Law of Contract is to introduce certainly in commercial and other transaction. Anson observes that the law of contract is indented to ensure that what a man has been led to expect shall come to pass, and what has been promised to him shall be performed. Last but not the least, Law, Law of Contract and the part of consideration all things are most important to us. As a Citizen of a country we have right to live with peach and to use a pa proper law.

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.

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.

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


 Web Sites:

  1. Web address: www.legal–dictionary.thefreedictionary.com/consideration, collected on February 29, 2012 at 7.30 pm to 8.00 pm.
  2. Web address: www.investorworks.com/1040/consideration.html, collected on February 29, 2012 at 7.30 pm to 8.00 pm.
  3. Web address: www.lawteacher.net, /contract law/lecture notes, collected on February 29, 2012 at 7.30 pm to 8.00 pm.
  4. Web address: www.e-lawresources.co.uk/consideration.php, collected on February 29, 2012 at 8.30 pm to 9.00 pm.
  5. Web address: www.nolo.com.legal…/consideration-every-contract -needs-33361.ht, collected on February 29, 2012 at 8.30 pm to 9.00 pm.
  6. Web address: www.4lawsschool.com/contracts101/consideration.htm, collected on February 29, 2012 at 8.30 pm to 9.00 pm.
  7. Web address: www.blurtit.com/q2587899.html, collected on February 29, 2012 at 10.00 pm to 10.30 pm.
  8. Web address: www.in.asswers.yohoo.com, collected on March 01, 2012 at 10.00 am to 10.30 pm.

9.Web address: www.en.wikipedia.org/wiki/contract, collected on February 25, 2012 at 8.00 am to 9.00 am.

10. Web address: www.law.freeadvice.com/general_practice/contract_law, collected on                  February 25, 2012 at 8.00 am to 9.00 am.

  1. Web address: www. Lawsociety.com/general/contract & consideration, collected on February 25, 2012 at 8.00 am to 8.30 am.
  2. Web address: www. Businessdictionary.com/definition/contract.html, Retrieved on February 25, 2012 at 9.00 am to 9.30 am.
  3. Web address: www.lawteacher.net/contract-law, Retrieved on February 26, 2012 at 11.30 pm to 12.30 am.
  4. Web address: www.lawteacher.net/consideration-rules.php, Retrieved on February 29, 2012 at 7.00 pm to 9.30 pm.
  5. Web address: www.thefreedictionary.com/consideration, collected on February 29, 2012 at 7.30 pm to 8.00 pm.

 Report & Book:

  1. “Business Law”, Writer is “Mohammad Khalakurjaman”, Published by National University.

[2] See Salmond, Jurisprudence (1872), Business law book by Khaliduljaman.

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

[4] Definition of Consideration with example from books and internet sources.

[5] Importance of consideration , from online library from cases- Frederick Wilmot-Smith, Replacing Risk-Taking Reasoning,  Law Quarterly Re

view, 2011.

[6] Requirement of mutual consideration for contract from online library.-Martin A. Hogg, Promise: The neglected obligation in European private Law, International and Comparative Law Quarterly, 2010.

 [7] Consilateral and bilateral contract The neglected ion in European private Law, International and Comparative Law Quarterly, 2010.

[8] Section 25 (1), and Raj Luckhy Debee Vs. Bhootnath (1900) said.

[9] Section 25 (3), and Appa Rao Vs. Surya Prakash (1900) said.

[10] Section 63, and Kapur Chand Godha Vs. Mir Nawab Himayat Ali Khan (1963) said.

[11] Section 185 said.

[12] Show is, www.allinterview.com/showanswers/76627.html.