CONSIDERATION

CONSIDERATION

Consideration is the foundation of every contract. The law enforces only those promises which are made for consideration. Where one party promises to do something, it must get something in return. This 'something in return' is called consideration. Consideration is the very life-blood of every contract. In the absence of consideration  or undertaking is purely gratutious. However, sacred and binding in honor, it is create no legal obligation.

Definition. Consideration has been defined in many ways.

According to pollock "Consideration is the price for which the promise of some other is brought and the promise thus given for value is enforceable."

It is something which is of some value in the eyes of law.

According to Section 2 (d) of the Indian Contract Act defines consideration as-

(a) when at the desire of the promisor,

(b) the promise or any other person,

(c) has done or abstained from doing, or does or abstain from doing, or promises to do or abstain from doing,

(d) something, such act or abstinence or promise is called a consideration for the promise.

Example:- A agrees to dell his horse to B for Rs. 1000. Here A's promise to sell his horse is for B's consideration to pay Rs. 1000 is A's consideration to sell his horse to B. 

Types of Consideration

At least three types of Considerations found in Business Law:

Past consideration. When something is done or suffered before the date of the agreement, at the desire of the promisor, it is called ‘past considera-tion.’ It must be noted that past consider­ation is good consideration only if it is given by the promisee, ‘at the desire of the promisor.  

Under English law, past consideration is no consideration. In India sec 25(2) adequately covers a past voluntary service.

Let us discuss some examples of this.

Illustrations

(a)       A teaches the son of B at B’s request in the month of January, and in February B promises to pay A a sum of Rs 200 for his services. The services of A will be past consideration.

(b)     A lawyer, gave up his practice and served as manager of a landlord at the latter’s request in lieu of which the landlord subsequently promised a pension. It was held that there was good past consideration. (Shiv Saran vs Kesho Prasad)

Present consideration. Consideration which moves simulta­neously with the promise, is called ‘present consideration’ or ‘executed consideration’. 

For example, A sells and delivers a book to B, upon B’s promise to pay for it at a future date. The consideration waiting from A is present or executed consider­ation since A has done his act of delivering the book simultaneously. with the promise of B. 

It should, however, be noted that it is said to be . ‘present consideration’ when at the time of the agreement it is executed on one side and executory on the other. If both parties have done their part under the contract, e.g., where A sells a book to B and B pays its price immediately, it is a case of executed contract (where nothing remains to be done) and not of executed or present consider­ation.

Future consideration. When the consideration on both sides is to move at a future date, it is called ‘future consideration’ or ‘executory consideration’. It consists of an exchange of promises and each promise is a consideration for the” other. 

For example, X promises to sell and deliver 10 bags of wheat to Y for Rs 6,500 after a week, upon Y’s promise to pay the agreed price at the time of delivery. The promise of X is supported by promise of Y and the consideration is executory on both ides. 

It is to be observed that in an ‘executed consider­ation’, the liability ‘is outstanding against only one side whereas in an ‘executory consideration’ it is outstanding on both ends.