Question 1 (a)
Inadequate consideration and the exceptions to "no consideration, no contract"
9 marks
- Time to write
- About 18 minutes
- Topic
- Consideration
- Notes
- Crux notes
Question
Question 1 (a) · 9 marks"Insufficiency of consideration is immaterial, whereas an agreement without consideration is void." Comment on it, and state what exceptions there are to the rule "No consideration, No contract."
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- CommentA statement to judge: take a stand on it in your first line, and come back to it at the end.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Inadequacy of consideration (Explanation 2), with illustrations 3 marks 5 min
- 2 Agreement without consideration void (s. 25) 1½ marks 3 min
- 3 Exceptions 4½ marks 8 min
- Check: every ask answered, key terms underlined 1 min
Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks.
Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Insufficiency of consideration is immaterial. Explanation 2 to section 25 of the Indian Contract Act, 1872 provides that inadequate consideration does not by itself make void an agreement to which the promisor freely consented; the court may, however, weigh the inadequacy when it decides whether the consent was in fact freely given. So if A, with free consent, agrees to sell a horse worth ₹1,000 for ₹10, the agreement is a contract (illustration (f)); if A denies that his consent was free, the inadequacy is evidence the court weighs (illustration (g)). The law leaves the parties to judge the value of what they exchange; it needs only that there is some consideration, real and lawful.
1Out of pure affection, the elders register the gift deed for their nephew at the registry desk.
Natural love and affectionA written and registered agreement made out of natural love and affection between parties who are near relatives.
2The boy had dragged the flooded godown's sacks to safety unasked—now the owner puts the promise in writing.
Compensation for past voluntary servicesA promise to compensate a person who has already voluntarily done something for the promisor.
3The debt is older than the law allows, cobwebs and all—yet the old man signs a fresh promise to pay.
Promise to pay a time-barred debtA written and signed promise to pay, wholly or in part, a debt barred by limitation.
Agreement without consideration is void. The general rule of section 25 is that an agreement made without consideration is void: "no consideration, no contract". A promise to give ₹1,000 for no consideration is a void agreement (illustration (a)).
Exceptions. An agreement is valid even without consideration:
- Natural love and affection (s. 25(1)): a written and registered promise made out of natural love and affection between near relatives (a father's registered promise to his son, illustration (b)).
- Past voluntary service (s. 25(2)): a promise to compensate, wholly or in part, someone who has voluntarily done something for the promisor (A finds B's purse and returns it; B's promise of ₹50 is a contract, illustration (c)), or has done something the promisor was legally compellable to do (A supports B's infant son, and B's promise to pay A's expenses is a contract, illustration (d)).
- Time-barred debt (s. 25(3)): a written, signed promise to pay a debt barred by limitation (illustration (e)).
- Completed gift (Explanation 1): a gift actually made is valid.
- Agency (s. 185) and bailment (s. 148): neither needs consideration.
- Charity: a subscription promise on which the promisee has acted.
Where the 9 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Inadequacy of consideration (Explanation 2), with illustrations | 3 |
| 2 | Agreement without consideration void (s. 25) | 1.5 |
| 3 | Exceptions | 4.5 |
| Total | 9 |
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