Business Law

Consideration and Object

UNIVERSITY OF GUJRAT 6/8/2011 Authored by: Shoaib Waqas

Business Law
Consideration and Object

Sec 2(d) defines, when at the desire of promisor, the promisee or any other person
has done or abstained from doing such act or abstinence or promise is called a consideration for the promisee. Essentials of a valid consideration 1. It must move at the desire of the promisor For a valid consideration, the act or abstinence which forms the consideration must be done at the desire of the promisor. It means that any act performed at the desire of the third party or without the desire of the promisor cannot be a consideration. Similarly, the act done voluntarily will not create a valid consideration. Example A saved Bs house from fire. B did not ask for help. A cannot demand payment for his service because he acted voluntarily. 2. It may move from the promisee or any other person A consideration may move from the promisee or any other person. It means a person can sue on a contract: even if the consideration for the promise moved from the third party. Example A gifted property to her daughter R on the condition that she would pay certain amount annually to As brother C. R promised to pay the amount to her uncle C. later R refused to pay. C sued. Held C could recover the amount as the consideration had moved from A to C. (Chinnaya vs. Ramayya) 3. It may be an act or abstinence or promise a) Act A consideration may be an act i.e. doing of something. In this sense consideration is in positive form. Example P agrees to construct As house for Rs. 10 Lac. As promise to pay Rs. 10 Lac is the consideration for Ps promise of constructing house. b) Abstinence Abstinence means refraining from doing something. In this sense consideration is in negative form.
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Business Law | 6/8/2011

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Example A promise not to sue B if B pays him additional Rs. 5000 the abstinence of A is the consideration for Bs payment. c) Promise For a valid consideration there must be a promise from both sides. It means that there must be a promise by one party against the promise of the other party. Example A agrees to sell his horse to B for Rs. 30000. Bs promise to pay Rs. 30000 is the consideration for As promise. As promise to sell his horse is the consideration for Bs promise.

Business Law | 6/8/2011