CONSIDERATION IN INDIAN CONTRACT ACT
The Indian Contract Act of 1872 provides the fundamental framework for legally binding agreements in India. It still controls how contracts are made and then carried out in the country and was passed during the British colonial era. One of the most important elements of a legitimate contract is consideration, which is essentially based on the principles of legally binding contracts.
A contract that is supported by consideration binds the parties to their obligations and is legally binding. In the absence of payment, such an agreement would be legally void and considered essentially gratuitous. By consideration, one party may benefit at the other’s expense.
What is consideration in indian contract act?
- Section 2(d) defines consideration in indian contract act. The statement states that consideration of the promise is defined as an act, promise, or refraining from performing something at the promisor’s request by the promise or any other person.
- As a result, consideration is essentially the sum of money paid in exchange for the two parties fulfilling their agreements. In this case, promisor is making the proposal, while promisee is accepting the proposal.
consideration contract law: Examples
The consideration contract lawexamples are as follows:
- As per their arrangement, B agrees to provide A with these services in exchange for A paying B Rs 20,000 to have B move his place of employment. In this instance, B’s consideration is the money, and A’s consideration is the services that B renders.
- The painting would be seen as consideration moving from Y and the money would be regarded as consideration moving from X if Y offers to paint a picture for X at his request and for a certain price.
Consideration in contract law: Important Ingredients
The promisor must request that the consideration continue:
- This implies that unless the promisor requests it, the consideration will not be regarded as valid.
- Differently, volunteer acts are not acceptable forms of compensation.
- For example, if you help someone discover their lost wallet and they request payment, you are not required to provide it to them. You unexpectedly and without their permission assisted someone.
Any other person or the promisee may provide consideration:
- It suggests that as long as the promise is treated with respect, it doesn’t matter who makes it.
- The promisor may move away from the promise or from anybody else if it has no objections.
- For example, in the case when A purchases a watch from B and C gives him the payment, A does not. According to consideration in contract law, which permits consideration to be given by the promise or by any other person, this contract is enforceable.
The consideration in contractmust be valid and allowed by law:
- A contract is void if it contains an illegal consideration.
- According to the Act, something is criminal if it hurts someone or their property, breaks any laws, or is immoral.
The consideration in contract must be sincere and reasonable:
- An impossible deed cannot be accepted as a valid consideration.
- One can be physically or legally impossible, but everything that is decided upon and accepted as consideration should be able to be carried out. Moreover, the variable in question needs to be certain.
The degree of consideration in contract law may not be sufficient because:
- Sufficient deliberation is not necessary under Indian law. It is permissible for parties to negotiate.
- Negligent negotiating by one party does not mean that the agreement is void. However, the decision must be accepted voluntarily by both sides.
- As an example, you may decide to sell your books for Rs. 200 instead of their Rs. 1,000 values. You cannot then claim that this was not enough thought out legally.
consideration contract law: Important Case Judgments
- In the case of Ramachandra Chintaman v Kaluraju, the counsel was guaranteed a certain amount of money should the litigation be successful. It was decided that the vow was void due to a lack of consideration. According to the provisions of the initial contract, the advocate had an obligation to use his best efforts from the outset.
- The court held in Mr. Raghunath M.G. v Sri D.N. Badriprasad that, subject to the exclusions specified in the challenged portion, an agreement without consideration is void under section 25 of the Indian Contract Act 1872. Based on the depositions of prosecution witnesses, the court determined that although the accused was informed that there was a three-year statute of limitations to return a loan transaction, he disregarded it.
A valid contract needs to be supported by consideration. Without it, the agreement is void and unenforceable, and it cannot be enforced. Consideration needs to be sufficient, significant, and unconditional in order to be accepted. If something is truly considered, it shouldn’t be illegal or unfeasible. It is important to keep in mind that in order to enter into a contract, you must provide a valid consideration, regardless of its value. It might be an act from the past, present, or future.
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