Discuss the element of “Consideration” under the Indian Contract Act, 1872.
According to the provisions of Indian Contract Act, 1872, an agreement without consideration is void. So, it can be said that consideration is one of the most important elements for making a valid and lawful contract.
Section 2(d) of the Indian Contract Act, 1872, defines the term ‘Consideration’ and according to this section, consideration may be anything which has real value in the eyes of law and it is given at the desire of promisor. Primarily, it means that whatever consideration is demanded by promisor, that is given to him.
In the leading case of Durga Prasad vs. Baldeo, the Hon’ble court held that it is essential that the consideration must have been given at the desire of promisor, rather than merely voluntarily or at the instance of some third party.
According to section 2(d) of the Indian Contract Act, 1872, it is true that consideration is given at the desire of the promisor but it may be given by the offeree or by any other person on his behalf. It is not essential that the consideration must be paid by the offeree only. If the offeree allows any third person to pay the consideration on his behalf, then that person can also pay the consideration and it will not affect the legality of a contract.
In the leading case of Chinnaya vs. Ramaya, the Hon’ble court held that in our Indian system, consideration may be paid by offeree or any other person on the behalf of offeree. Moreover, according to section 2(d) of the Indian Contract Act, 1872, a consideration may be past, present or future.
In English law, past consideration is no consideration but in Indian law, it is considered a good consideration. Past consideration is that consideration which has been paid by the party even before the promise made by the promisor.
But if one of the parties to the contract performs his part of promise and another party subsequently gives the consideration to that party who has performed his promise, that consideration is known as present consideration whereas if one party promises to do an act and another party also promises to give the consideration, that consideration is called as future consideration.
In the leading case of T.V. Krishna Iyer vs. The Official Liquidator, the Hon’ble court held that in the Indian Legal System, a past consideration is good consideration and contract based upon it will be considered valid and lawful.