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    Contract

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    Riddhi Maheshwari
    Consideration is an essential element of determining whether parties genuinely intend to form a legal contract. Section 2(d) of the Indian Contract Act defines consideration as something done or promised in exchange for a promise. Consideration does not need to be adequate or equal in magnitude, but it must be legal. Executory consideration involves a future act, while executed consideration involves a present act. Past consideration involves an act done before a promise and generally does not create a valid contract under common law. Two key cases discussed were Durga Prasad v. Baldeo, which established that absence of consideration renders a contract unenforceable, and Chinnaya v. Ramayya, which treated concurrent agreements as a single transaction in evaluating consideration

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    Contract

    Uploaded by

    Riddhi Maheshwari
    28 views2 pages
    Consideration is an essential element of determining whether parties genuinely intend to form a legal contract. Section 2(d) of the Indian Contract Act defines consideration as something done or promised in exchange for a promise. Consideration does not need to be adequate or equal in magnitude, but it must be legal. Executory consideration involves a future act, while executed consideration involves a present act. Past consideration involves an act done before a promise and generally does not create a valid contract under common law. Two key cases discussed were Durga Prasad v. Baldeo, which established that absence of consideration renders a contract unenforceable, and Chinnaya v. Ramayya, which treated concurrent agreements as a single transaction in evaluating consideration

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    Consideration is an essential element of determining whether parties genuinely intend to form a legal contract. Section 2(d) of the Indian Contract Act defines consideration as something done or promised in exchange for a promise. Consideration does not need to be adequate or equal in magnitude, but it must be legal. Executory consideration involves a future act, while executed consideration involves a present act. Past consideration involves an act done before a promise and generally does not create a valid contract under common law. Two key cases discussed were Durga Prasad v. Baldeo, which established that absence of consideration renders a contract unenforceable, and Chinnaya v. Ramayya, which treated concurrent agreements as a single transaction in evaluating consideration

    Copyright:

    © All Rights Reserved
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    Download as txt, pdf, or txt
    28 views2 pages

    Contract

    Uploaded by

    Riddhi Maheshwari
    Consideration is an essential element of determining whether parties genuinely intend to form a legal contract. Section 2(d) of the Indian Contract Act defines consideration as something done or promised in exchange for a promise. Consideration does not need to be adequate or equal in magnitude, but it must be legal. Executory consideration involves a future act, while executed consideration involves a present act. Past consideration involves an act done before a promise and generally does not create a valid contract under common law. Two key cases discussed were Durga Prasad v. Baldeo, which established that absence of consideration renders a contract unenforceable, and Chinnaya v. Ramayya, which treated concurrent agreements as a single transaction in evaluating consideration

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    Consideration' means "something in return," i.e.

    quid pro quo, which is an


    essential element in determining the parties' genuine intention to create a legal
    relationship.

    Section 2(d) of the Indian Contract Act states that "when the promisor, promisee,
    or any other person has done or abstained from doing or does or abstains from doing
    or promises to do or abstain from doing something, such act, abstinence, or promise
    is called a consideration for the promise."

    • At the offeror's request, consideration should be passed: - The offeree


    should only send the offeror's desired consideration. The offeree has no right to
    claim counter-consideration if he sends unwanted consideration. Baldeo v. Durga
    Prasad.
    • A promisee or another person may be the source of consideration:- Section
    2(d) of the Indian Contract Act states that consideration may come from the
    promisee or, if the promisor has no objections, from any other person.

    Only the promisee should be considered in English law. Despite this, English law
    has made an exception, requiring that the promisee and the other person sending the
    consideration be related by blood. (Poole v. Dutton)

    • Consideration does not have to be adequate: contract consideration does not


    have to be of equal magnitude. The contract's validity will not be harmed by
    insufficient consideration. (Thomas against Thomas)

    • The consideration must be legal:- The presence of illegal consideration


    renders the contract void.

    1. EXECUTORY (FUTURE) CONSIDERATION :


    The Executory Consideration or Future Consideration is the consideration when one
    or more parties make promise that consideration is to be performed in future.
    In simple terms, executory consideration occurs when a party has yet to complete
    his contractual responsibilities while also promising to perform that consideration
    at a later period.
    For instance, A wishes to give it to his brother for his birthday. B sold A a bike,
    and A requested that it be delivered on his brother's birthday. The delivery bike
    will be used in the future here. This is an example of executory/future
    consideration.

    2. EXECUTED (PRESENT)CONSIDERATION :
    The executed consideration, also known as the present consideration, is when the
    parties have fulfilled their pledges.
    In basic terms, the contracting parties fulfilled their contractual
    responsibilities, and the contract's performance was finished; this is referred to
    as an executed consideration.
    Example: A purchases a pen for Rs. 20/- from a stationery store. A pays the shop
    owner Rs. 20 in exchange for the pen. Both considerations have been finished.
    Executed/present consideration is the term for this situation.

    3. PAST CONSIDERATION :
    With a general contract, consideration should be with the contract; however, in
    past consideration, the act has already been done before making any promise, and
    this is referred to as Past Consideration in contract law.
    The previous consideration is no consideration, according to Anson, and therefore
    is unenforceable in English law. As a result, in Common Law, prior consideration
    has no value and is not good consideration.
    For example, A found a pocketbook on the side of the road and searched for its
    actual owner, B. B receives the purse from A. Then B rewards him with Rs. 500/-.
    This is an example of past consideration.
    In the scenario above, A acted freely and returned B's purse. This is a
    consideration from the past.

    1. DURGA PRASAD V. BALDEO AND OTHERS (1881)ILR3ALL221 :-


    • JUDGEMENT
    The plaintiff's claims were denied, and the case was dismissed by the court. This
    was done because there was no conspicuous and recognised consideration involved in
    this case, and hence section 2(d) of the Indian Contract Act, 1872 prevents the
    arrangement from being recognised as a contract. According to Section 25 of the
    Act, the absence of a consideration rendered the contract unenforceable. The judges
    also determined that because the Act defines the necessity of consideration as an
    essential condition for a contract, there is no room for an appeal, and the case
    was dismissed.

    2. Chinnaya V. Ramayya (1882) ILR (1876-82) 4 Mad 137

    • JUDGEMENT
    The Court determined that the agreement authorising the transfer of the estate to
    the respondent as a gift and the commitment to pay an annuity are both concurrent
    agreements. As a result, each of these agreements will be treated as a single
    transaction in light of the definition and explanation of compensation provided in
    section 2(d) of the Indian Contract Act, 1872.

    As a result, the responder is obligated to pay the aforementioned consideration


    because she committed to do so while accepting the estate as a gift from her
    mother.

    9. Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 97

    • DECISION / OUTCOME
    Despite the fact that the wrappers had no intrinsic economic worth in and of
    themselves, the House of Lords ruled that they were part of the consideration for
    the sale of records. 'A contracting party can stipulate what consideration he
    chooses,' Lord Somervell held (at 114). If it is determined that the promisee does
    not like pepper and will toss away the corn, a peppercorn remains a good
    consideration.'As a result, because the wrappers had no monetary value, the sale
    was not covered by section 8 of the 1956 Act, and the Lords ruled in favour of the
    defendants.

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