Section 2 (d) of the Indian Contract Act, 1872 defines consideration as “When, at the desire of the promisor, the promise or any other person as done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, such act or abstinence or promise is called a consideration for the promise “

Section 2 (d) of the Indian Contract act, 1872 says there are three main kinds of consideration – Past Consideration, Present Consideration, and Future Consideration.

In Currie v. Misa, Justice Lush defined the term consideration as follows-

“A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by other”.

Exceptions to the consideration:

There are few exceptions when consideration is not needed to be valid –

As per Section 25 of the Indian Contract Act, 1872

• Natural love and Affection

A registered agreement on the basis of natural love and affection between the parties is enforceable by law even without consideration. It includes parties related by blood or marriage.

In Rajlukhy Dabee v. Bhootnath Mookherjee, 1900, the defendant promised to pay maintenance money every month to is wife. The promise was written in writing and it was also mentioned that the husband and wife had issues and used to quarrel. A case was filed by the plaintiff to recover the amount promised by the defendant. However, the court held that even though the parties were in a near relation to each other, they lacked natural love and affection between them thus stating that amount couldn’t not be recovered.

• Past voluntary Services

If a person has provided voluntary service in the past and the beneficiary promises to pay at a later date, the contract is valid provided that

1. The service provided in the past was voluntary without any undue influence or coercion.
2. It was rendered to the promisor.
3. The promisor was already existing at the time of voluntary service specially I the promisor is an organization.
4. The promisor had shown his willingness to compensate the voluntary service.

• Promise to pay a time barred debt

A time-barred debt is a debt that has passed the statute of limitation and cannot be collected. If a person makes a written promise signed by him or his authorized agent about paying a time- barred debt, then it is valid despite there being no consideration. The promise can be made to pay the debt wholly or in part.

• Creation of Agency

As per Section 185 of the Indian Contract Act, 1872, no consideration is required in creation of an agency.

• Bailment

As per Section 128 of the Indian Contract Act, 1872, bailment is the delivery of goods from one person to another person for some purpose, the goods are either returned or disposed of, in accordance with the directions given to him by the person delivering them. There is no necessity of consideration to effect a contract of bailment.

In Bilaspur Central Cooperative Bank Ltd v. The State of Madhya Pradesh, the State Government avers that the deposit with the police was a gratuitous act and was not for consideration. The State Government denies its liability on this ground and on the added ground that even if negligence be established the State Government is not responsible for the tortuous acts of its employees.

• Gifts

The rule of no consideration no valid contract does not apply to gifts. Explanation (1) to Section 25 of the Indian contract Act, 1872 states that the rule of an agreement without consideration being void does not apply to gifts made by a donor and accepted by a done.

• Charity

Charitable giving occurs when a donor bequeaths a portion of their assets to a charitable cause, such as a non-profit charitable organization. If a person undertakes a liability on the promise of another to contribute to charity is valid irrespective of the absence of any consideration.

Chapter 8 of the “Introduction to Contract Law” mentions that the convention on Contracts for the International Sale of Goods does not require consideration for a contract to be binding.

The UCC permits one party to discharge, without consideration, a claim or right arising out of an alleged breach of contract by the other party. This is accomplished by delivering to the other party a signed written waiver or renunciation. Uniform Commercial Code, Section 1-107. This applies to contracts governed by the UCC and is not limited to the sales provisions of Article 2. The UCC also permits a party to discharge the other side without consideration when there is no breach, and it permits parties to modify their Article 2 contract without consideration.

No consideration is necessary for this remission, and as held in Kattika Bapanamma v. Kattika Kristnamma, the plea should not offend against Section 92 of the Indian Evidence Act. The plaintiff is entitled to rent at the rate at which he has been receiving it till the end of Fasli 1321.as the plaintiff has been given a decree for the rent paid as usual by the courts, the second appeal fails and is dismissed. Each party will hear bear his own costs.

In Biwa v. Shivaram, 1899, defendant over written agreement agreed to give one half of the property. The Bombay High Court held that in order to reconcile with the brother, the defendant was willing to give hm a share of the property out of love and affection and thus attracted Section 25 of the Indian Contract act, 1872.

In Karam Chand v. Basant Kaur, 1911, the court held that even though a pomise by a minor is void if a person of majority age makes a promise to compensate for the obtained goods when he was minor, the promise is held to be an exception that falls under the provision.

Reference:

• https://blog.ipleaders.in/consideration-of-a-contract/
• https://www.srdlawnotes.com/2017/06/what-is-consideration-and-what-are.html
• https://www.lawctopus.com/academike/contracts-arising-from-love-and-affection/?amp=1
• https://www.legalmatch.com/law-library/article/chariatable-gifts-as-contracts-do-i-have-to-honor-my-charitable-pledge.html
• https://saylordotorg.github.io/text_law-for-entrepreneurs/s14-03-promises-enforceable-without-c.html
• https://blog.ipleaders.in/the-legality-of-agreements-without-consideration/?amp=1
• https://www.casemine.com/judgement/in/5609781de4b0149711339c0c

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