Question 1 OR (b)

Consideration and the exceptions to "no consideration, no contract"

6 marks

Time to write
About 12 minutes
Topic
Consideration
Notes
Crux notes

Question

Question 1 OR (b) · 6 marks

Define consideration. Also discuss what exceptions exist 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

12 minfor 6 marks

Read from the question

  • Define…Discuss…Two asks in one question: answer both.

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Definition of consideration 1½ marks 1 min
  3. 2 The rule in section 25 ½ mark 2 min
  4. 3 Exceptions 4 marks 7 min
  5. Check: every ask answered, key terms underlined 1 min

Easy marks

  • Definition of consideration (step 1, 1½ marks): a clear definition and a line on what it covers. It opens the answer, so it takes a minute or two.

Short on time? Step 3 carries 4 of the 6 marks: guard its minutes.

Try it first. About 12 minutes for 6 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.

Definition. Section 2(d) of the Indian Contract Act, 1872: “when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”. It is "something in return", the price paid for the other party's promise.

Picture itConsideration and the exceptions to "no consideration, no contract"

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.

The rule. An agreement made without consideration is void (s. 25): no consideration, no contract.

Exceptions. An agreement without consideration is nevertheless valid in these cases:

  1. Natural love and affection (s. 25(1)): a written and registered agreement made out of natural love and affection between parties who are near relatives, such as a husband's registered promise to pay his earnings to his wife.
  2. Compensation for past voluntary services (s. 25(2)): a promise to compensate a person who has already voluntarily done something for the promisor.
  3. Promise to pay a time-barred debt (s. 25(3)): a written and signed promise to pay, wholly or in part, a debt barred by limitation.
  4. Agency (s. 185): no consideration is needed to create an agency.
  5. Completed gift: the section does not affect a gift actually made.
  6. Bailment (s. 148): no consideration is required for a contract of bailment.
  7. Charity: a promise to subscribe to a charity is enforceable where the promisee has acted on it and undertaken a liability.

Where the 6 marks sit

#ComponentMarks
1Definition of consideration1.5
2The rule in section 250.5
3Exceptions4
Total6
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