Tuesday, May 28, 2024





Mr. X wants to sell his house to Mr. Y. They both have entered into a contract and they mutually agreed to a consideration of Rs.50,000 only. X sold the house to Y as per the agreed terms.
Later, X filed a case against Y stating that the consideration was very less hence the contract should be declared void. Give your comments in light of the provisions of the Indian Contract Act, 1872.

Section 2(d) of the Indian Contract Act defines Consideration as:
“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.”

In simple words, Consideration means ‘something in return’ i.e. ‘quid pro quo’.
One of the essential elements for a valid consideration is that the Consideration may not be adequate but it must be of some value in the eyes of law and it must be real and capable of being performed.

The Indian law does not consider the adequacy of the consideration but only determines that the consent of the parties is not affected by the inadequacy of the consideration and it is free consent.
Thus the parties are free to decide the adequacy of consideration at the time of entering into the contract.

Supreme Court in the case of Chidamabara Iyer v. P.S. Renga Iyer (1966) held that the consideration “shall be ‘something’ which not only the parties regard but the law can also regard as having some value.

Thus applying the above provision, it can concluded that in the given scenario the parties mutually agreed to the terms of the contract and there was free consent. Only the inadequacy of the consideration is not a valid ground for declaring the contract void thus the contract is valid and legally enforceable.

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