ABSTRACT
Consideration is the cornerstone of contract law and theory upon which enforcement of contracts hinges. This paper addresses the complexity of consideration, including its key requirements, exceptions, and shifting perceptions in various legal systems. It addresses judicial views, legislative intervention, and contemporary developments, including the effects of promissory estoppel and adequacy of consideration. This article in the end provides an overview of how consideration impacts contractual obligations in modern legal practice, with reference to Indian contract law and also an essential part of the Contract.
Key Words: Law of Contract, Consideration, Doctrines, ingredient.
INTRODUCTION
Law of contracts is the cornerstone of commercial and personal transactions, making sure that contracts are legally binding and enforceable. Doctrine of consideration is one of the basic principles of contract that need a contract to involve some kind of exchange of value between the contracting parties. Consideration is defined under section 2(d) of the Indian Contract Act which is an essential part of the contract and also considerations are must be of lawful. Any consideration which is unlawful in nature then it shall be called as void.
UNDERSTANDING CONSIDERATION IN THE INDIAN PERSPECTIVE
Consideration is the most important ingredient in the formation of a contract, as interpreted under Section 2(d) of the Indian Contract Act, 1872. According to it, consideration is an act or omission made or not made at the promisor’s will. This is a provision to make an agreement enforceable through law only in the event of a valid reciprocation of value between parties to a contract. Indian judiciary has stuck to this principle without wavering and promoted the consideration element as required for the sanction of a contract.
ELEMENTS OF CONSIDERATION
For consideration to be enforceable, it must satisfy certain requirements.
It has to pass from the promisee, i.e., only one who has given consideration can initiate proceedings on a contract. Consideration has to be of some value to law, though not necessarily sufficient but only adequate.
Further, past consideration is not usually enforceable in the eyes of law since consideration can be offered only for a present or future promise. But, according to Indian Law, past consideration could be enforced if it was provided in answer to the request of the promisor, as set forth in the case of Sindha Shri Ganpatsinghji v. Abraham (1896) which is given under section 25 of the act.
CASE LAWS FOR UNDERSTANDING
Indian courts have been the center for the development of the doctrine of consideration in various landmark judgements which are as follows:
In the case of Chinnaya v. Ramayya (1882), the Madras High Court held that consideration can pass through a third party if it was paid at the request of the promisor.
In the case of Sonia Bhatia v. State of UP (1981), the Supreme Court reiterated that consideration has to be of lawful value, albeit it may be insufficient.
In the case Abdul Aziz v. Masum Ali (1914) clarified that the promise without consideration is not enforceable, establishing yet another precedent in the doctrine under Indian contract law. Exceptions to the
DOCTRINE OF CONSIDERATION IN INDIA
Whereas consideration is in general required, the Indian Contract Act excludes particular kinds of agreement under Section 25. They include agreements made on natural love and affection, agreement to pay for past gratuitous service, and agreement to pay an excluded debt.
It was held in the case of Kedarnath Bhattacharji v. Gorie Mahomed (1886) that where there is an exchange of promise which give rise to legal responsibilities, it can be enforced even if there is not an expressed consideration.
In the case of Bhiwa v. Shivaram, brother promised out of love that he will give him the property but later on denied from giving he said property. When the matter went to the court, the brother contended that the there is no consideration is being paid to me in exchange of such property. The court held that when promise is made out of the natural love and affection and which had no decided consideration still the contact is valid, and hence the property will be given to the brother as decided as per the section 25 of the Act which states that agreement is valid even if there is no consideration.
PROMISSORY ESTOPPEL AND CONSIDERATION IN INDIA
The doctrine of promissory estoppel, although not enacted statutorily, has been held in Indian courts as an exception to the doctrine of consideration. In Union of India v. Anglo Afghan Agencies (1968), the Supreme Court held that where one of the parties had acted on a promise to his detriment, the promisor could be prevented from revoking the promise. The doctrine provides justice in contractual dealings even where the strict conditions of consideration are not fulfilled.
MODERN CONCERNS
The doctrine of consideration is plagued with issues in contemporary contract law, particularly in complex commercial contracts. Increased use of promissory estoppel and the good faith doctrine eats away at rigid enforcement of consideration in Indian case law. Furthermore, the rapid onset of e-commerce and electronic contracts casts new challenges on using conventional considerations rules in virtual transactions.
CONCLUSION
The principle of consideration remains the cornerstone of Indian contract law, ensuring equity and reciprocity of obligation between parties in a contract. Notwithstanding its coloring from Indian judgments, the rule remains essential for enforcing contracts. One hopes that legal development into the future remains to redefine its scope, mediating between custom and the needs of modern enterprise.
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WRITTEN BY SHIVRANJNI
