Consideration - Business Law (BBS 2nd Year)

Consideration

Define consideration and describe rules regarding consideration?

Consideration cab be defined as a price of promise, which is bought by the next parties (promise). When a party to an agreement promises to do something he/she must get something in return which must be valuable in the eye of law. This ‘something’ is defined as consideration which may be price, reward, payment or value for which the promise of the other is carried.

According to Justice palterson : consideration means something, which is of some value in the eye of law, it may be some benefit to the planting or some detriment to the defendant.

For example: A agree to sell a house to B for Rs 2 lakh. For A’s promise, the consideration is Rs. 2 lakh and for B’s promise, the consideration is the house.

Rules Regarding consideration

a) Consideration must be real and something of valuable in the eye of law.

b) Consideration must move at the desire of the promisor: The act must be done at the desire of the promisor. Without the desire of the promisor no consideration can be valuable. It regards that the consideration must be moved from promise only not from other or stranger to contract.

c) Consideration may move from the promise or third persons: The act which constitutes a consideration may be moved by the promise or any other person on his behalf to enforce a promise. But in English law it must be from the promise not from other.

d) Consideration may be of past, present or future.

e) Consideration must be lawful: When a party to an agreement promises to do something the acceptors must get something in return which must be legal and have the values in the eye of law. An illegal consideration is not supposed to be a contract. It is void.

f) Consideration need not be adequate(satisfactory) : Consideration need not be adequate to the promise. The contract .......

is depend upon consideration. So quantum of the consideration is decided by the parties to the contract. The adequacy of consideration is determined by the facts, circumstances and necessities and nature of cases.