Description
Complete coverage of consideration in a contact.
CONSIDERATION
INTRODUCTION:
Consideration (quid pro quo) is one of the essential elements of a valid contract. A consideration of some sort or other is so necessary to the forming of the contract that is nandum pactum, this means an agreement to do or pay something on one side without any consideration is not supported by law.
Definition of Consideration:
Section 2(A) defines Consideration as When at the desire of the promisor, the promisee or any other person has done or abstained from doing, something or promises to do or to abstain from doing something such act or promise is called a consideration for the promise.
Essentials of Valid Consideration:
1. Consideration should move at the desire of the promisor. ex: Durga Prasad vs Baldeo. 2. Consideration May move from the promisee or any other person. 3. Consideration may be past, present, future.
4. Consideration need not be adequate. 5. Consideration must be real. 6. It must be something that the parties are not already bound to do. 7. It must not be illegal, immoral or opposed to public policy.
Doctrine of Privity of contract:
The doctrine of privity of contract dictates that only persons who are parties to the contract are entitled to take action to enforce it. A person who stands to gain a benefit from the contract (a third party beneficiary) is not entitled to take any enforcement action if he or she is denied the promised benefit.
Example:
A promises B, for consideration moving from B, to pay C $100. Here A and B are parties to the contract-privy to the contract-and can sue each other if there is a breach by the other. C is not a party to the contract and cannot sue A if A fails to pay C the sum of $ 100.(here that Dunlop case should come..)
Exception to the Stranger to a contract can not sue:1. Where an express or implied trust is created. Amir Ullah vs. Central Govt:An addressee of an insured article is entitled to sue the Post office in case of loss, as on receipt of such article, the post office becomes in law a constructive trustee for the addressee.
2. Family settlement: Veeramma vs. Appayya:
A daughter along with her husband entered into the contract with her father to look after the mother and property of father will be conveyed to him. Later on she refused to look after mother. Here the mother being stranger to contract but as she knew about the contract can sue her daughter.
When the defendant constitutes himself, as the agent of the third party:Thus if A receives some money from B to be paid over to C and he admits of this receipt to C, than C can recover this amount from A who shall be regarded as the agent of C.
3. In the case of agency. 4. Covenant.
NO CONSIDERATION NO CONTRACT:
(Ex nudo pacto ± non oritur actio) A contract cannot be enforced by anyone unless it has the element of consideration in it. If there is no consideration then the contract cannot be considered as a valid contract.
Exceptions to the rule:
1. Contract made on account of natural love and affection. 2. Contract to compensate for past voluntary service. 3. Promises to pay time barred debt. 4. Completed gift. 5. Contribution to charity.
CONCLUSION:
Consideration is an essential factor to be bound by a contract and to make the contract fair and complete because only if there is consideration in a contact, it is said to be valid.
doc_567520765.ppt
Complete coverage of consideration in a contact.
CONSIDERATION
INTRODUCTION:
Consideration (quid pro quo) is one of the essential elements of a valid contract. A consideration of some sort or other is so necessary to the forming of the contract that is nandum pactum, this means an agreement to do or pay something on one side without any consideration is not supported by law.
Definition of Consideration:
Section 2(A) defines Consideration as When at the desire of the promisor, the promisee or any other person has done or abstained from doing, something or promises to do or to abstain from doing something such act or promise is called a consideration for the promise.
Essentials of Valid Consideration:
1. Consideration should move at the desire of the promisor. ex: Durga Prasad vs Baldeo. 2. Consideration May move from the promisee or any other person. 3. Consideration may be past, present, future.
4. Consideration need not be adequate. 5. Consideration must be real. 6. It must be something that the parties are not already bound to do. 7. It must not be illegal, immoral or opposed to public policy.
Doctrine of Privity of contract:
The doctrine of privity of contract dictates that only persons who are parties to the contract are entitled to take action to enforce it. A person who stands to gain a benefit from the contract (a third party beneficiary) is not entitled to take any enforcement action if he or she is denied the promised benefit.
Example:
A promises B, for consideration moving from B, to pay C $100. Here A and B are parties to the contract-privy to the contract-and can sue each other if there is a breach by the other. C is not a party to the contract and cannot sue A if A fails to pay C the sum of $ 100.(here that Dunlop case should come..)
Exception to the Stranger to a contract can not sue:1. Where an express or implied trust is created. Amir Ullah vs. Central Govt:An addressee of an insured article is entitled to sue the Post office in case of loss, as on receipt of such article, the post office becomes in law a constructive trustee for the addressee.
2. Family settlement: Veeramma vs. Appayya:
A daughter along with her husband entered into the contract with her father to look after the mother and property of father will be conveyed to him. Later on she refused to look after mother. Here the mother being stranger to contract but as she knew about the contract can sue her daughter.
When the defendant constitutes himself, as the agent of the third party:Thus if A receives some money from B to be paid over to C and he admits of this receipt to C, than C can recover this amount from A who shall be regarded as the agent of C.
3. In the case of agency. 4. Covenant.
NO CONSIDERATION NO CONTRACT:
(Ex nudo pacto ± non oritur actio) A contract cannot be enforced by anyone unless it has the element of consideration in it. If there is no consideration then the contract cannot be considered as a valid contract.
Exceptions to the rule:
1. Contract made on account of natural love and affection. 2. Contract to compensate for past voluntary service. 3. Promises to pay time barred debt. 4. Completed gift. 5. Contribution to charity.
CONCLUSION:
Consideration is an essential factor to be bound by a contract and to make the contract fair and complete because only if there is consideration in a contact, it is said to be valid.
doc_567520765.ppt