Meaning of Consideration :
Consideration, in general, means ‘something in return. The agreement is legally enforceable only when supported by consideration, i.e. when both the parties give something and get something in return. According to Pollock : consideration is the price for which the promise of the other is bought and the promise thus, given for value is enforceable.”
Example: Anita promises Babita to guarantee payment of price of goods, which Babita sells on credit to Celine. Here, selling of goods by Babita to Celine is consideration for Anita’s promise.
Legal rules regarding to consideration :
1. It must move at the desire of the promisor. If it is done at the instance of a third party or without desire of the promisor, it will not be a good consideration.
2. It is not essential that only the promisor must gain or loose from consideration.
3. Consideration may move from the promisee or any other person.
4. Consideration can be in the form of an act or an abstinence or forebearance or it can be a return promise also.
5. It may be present, past or future.
6. Every contract must have some consideration. It should be adequate or necessarily be equal in value with something given. Consideration must however be something to which the law attaches value.
7. It must be real, competent and not illusory.
8. Consideration must be legal/lawful, and not illegal, immoral. Consideration opposed to public policy also makes a contract void.
9. It must be something which the promisor is not already bound to do.
10. The general rule is that an agreement made without consideration is void. Sec. 25 deals with the exception to this rule. In such cases, with the exception to this rule. In such cases, the agreements are enforceable even through they are made without consideration.
Such cases are :
- A promise to pay for a past voluntary service is binding.
- Promise to pay a time-bound debt.
- No consideration is necessary to create an agency.
- When there is contract of donation, or completed gift, no consideration is required.
