How there be a contract enforceable without consideration?
Asked by Ruchika Mahajan Last Modified
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Rakesh Rustogi
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Section 25 Indian Contract Act 1872 declares that a contract, without consideration is void and is thus not enforceable. However in three specific situations, outlined in the same section, contracts will be enforceable even when they are not backed up with consideration.
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Piyush Priyadershi
Law Teaching
Hello Ruchika.. thanks for your question...
I think you need to first understand the basic difference between an AGREEMENT & a CONTRACT
An Agreement is defined under section 2(e) of Indian Contract Act, 1872 as "Every promise and every set of promise, forming the consideration for each other, is...
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Hello Ruchika.. thanks for your question...
I think you need to first understand the basic difference between an AGREEMENT & a CONTRACT
An Agreement is defined under section 2(e) of Indian Contract Act, 1872 as "Every promise and every set of promise, forming the consideration for each other, is an agreement"
whereas Contract is defined under section 2(h) as - "An Agreement enforceable by law is a contract"
and section 2(g) says An Agreement not enforceable by law is said to be VOID
so technically speaking All Contracts are enforceable.
that leads us to REPHRASE your query as to - "Is an AGREEMENT enforceable without consideration"
We will first see as to whether Consideration is an essential ingredient of an Agreements to be classified as a Contract. The answer is yes as Section 10 of the Indian Contract Act says that - All Agreement are Contract if they are made by
a. Free consent of parties competent to contract
b. FOR A LAWFUL CONSIDERATION.
c. with a lawful object
d. not expressly declared to be void (eg. Agreement in restraint of marriage/trade legal proceedings etc. under section 26, 27 & 28 of Contract Act, 1872)
Now question arises - is an Agreement without consideration void? - Section 25 very categorically says that an Agreement made without Consideration is Void
so the next question arises - Can there be an Agreement without consideration?
The Answer is yes and for that we will have to look again at Section 25 of the Indian Contract Act, which says that An Agreement without Consideration is void UNLESS it is
1. a. in writing
b. is registered under the law
c. is made on account of natural love and affection between parties standing in a near relation to each other
2. it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor
3. it is a promise - made in writing and signed - to pay wholly or in part a debt of which the creditor might have enforced payment, but for the law of limitation of suits.
Hope that answers your query. Further queries/objection/suggestion are welcome. read less
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According to section 25 of the contract act a contract without consideration is void but in the same section there are three separate clauses which tells that a contract without consideration is valid and enforceable ( ref -: section 25 indian contract act 1872)
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Considerations is an important element of any contract
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Business law recognizes very few circumstances under which a contract can or will be ruled to be enforceable without consideration being present. Three of these circumstances include when a promise has been made to repay a debt which the statute of limitations would normally prevent a creditor from collecting...
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Business law recognizes very few circumstances under which a contract can or will be ruled to be enforceable without consideration being present. Three of these circumstances include when a promise has been made to repay a debt which the statute of limitations would normally prevent a creditor from collecting payment on, promises which cause detrimental reliance which is also known as promissory estoppel to come into effect, or pledges to make a donation to a charity. read less
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Selection
Consideration generally means a give and take relationship. for e.g. if you buy a pen from a shop, you will pay cash and get pen. The exchange of cash with pen and vice versa is known as give and take relationship i.e. consideration in law. So, if there is no give and take relationship, there is no consideration,...
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Consideration generally means a give and take relationship. for e.g. if you buy a pen from a shop, you will pay cash and get pen. The exchange of cash with pen and vice versa is known as give and take relationship i.e. consideration in law. So, if there is no give and take relationship, there is no consideration, hence no contract at all. section 25 of the Indian contract act, 1872 states various situations in which there is no give and take relationship but can be challenged in the court of law. examples of Section 25 are:
1. Agreement on account of natural love and affection: if a Hindu husband after referring to quarrels and disagreements between himself and his wife, through a registered document promises to pay his wife Rs. 1,000 per month for her maintenance, this agreement is void as it has not been made out of love and affection but out of quarrels and disagreements.
e.g. 2: A father out of natural love and affection promises to give his son Rs. 1000. Father puts his promise in writing and gets it registered, this agreement is enforceable even though there is no consideration.
So it is clear from the above example 2: that section 25(1) states that in order to get an agreement enforceable by law without consideration, the following conditions must be satisfied:
1. it is in writing
2. it is registered under law
3. it is made out of natural love and affection
4. it is between parties standing in near relations to each other. read less
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Selection
2. compensation for voluntary services: examples : Pension and Gratuity to government employees. see there is no relationship of give and take. but a government employee can sue government for not paying pension.
3. time barred debts: are those debts whose time of recovery has been expired. the time...
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2. compensation for voluntary services: examples : Pension and Gratuity to government employees. see there is no relationship of give and take. but a government employee can sue government for not paying pension.
3. time barred debts: are those debts whose time of recovery has been expired. the time of recovery is given in separate act known as Limitation Act. say for e.g. money recovery can be done only within 3 years from the date of default. so if a person who has lent some money to you, and you have entered into an agreement in writing, and do not pay it within the time agreed, and a considerable time lag is there say 5 years, then the person can sue you on the ground that every time you asked for extension, a fresh time period started, though the original agreement is very old.
4. contribution to charity: you can read the case Kedar Nath vs. Gauri Mohammad
5. completed gifts: gifts received on the occasion of marriage, birthdays
6. contract of agency read less
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Sameer Velankar
Legal Expert and tutor, Marathi guidance for non maharashtrians and foreigners, communication expert
quasi contracts
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In case of a Gift Deed the consideration is not money its natural love and affection.
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In case of a Gift Deed the consideration is not money its natural love and affection.
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