Indian contract act, 1872
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VALIDITY OF AN AGREEMENT WITHOUT CONSIDERATION The general rule is that an agreement made without consideration is void (Section 25). In every valid contract, consideration is very important. A contract may only be enforceable when consideration is there. However, the Indian Contract Act contains certain exceptions to this rule. In the following cases, the agreement though made without consideration, will be valid and enforceable.
.1. Natural Love and A ection: Conditions to be ful lled under section 25(1 .(i) It must be made out of natural love and a ection between the parties. . (ii) Parties must stand in near relationship to each other. . (iii) It must be in writing . (iv) It must also be registered under the law . A written and registered agreement based on natural love and a ection between the parties standingin near relation (e.g., husband and wife) to each other is enforceable even without consideration. Example: A husband, by a registered agreement promised to pay his earnings to his wife. Held the agreement though without consideration, was valid.
2. Compensation for past voluntary services: A promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, is enforceable under Section 25(2). In order that a promise to pay for the past voluntary services be binding, the following essential factors must exist: (i) The services should have been rendered voluntarily (ii) The services must have been rendered for the promisor (ii) The promisor must be in existence at the time when services Were rendered . (iv) The promisor must have intended to compensate the promisee. Example: P nds R's purse and gives it to him. R promises to give P 10,000. This is a valid contract.
3. Promise to pay time barred debt: Where a promise in writing signed by the person making it or by his authorised agent, is made to pay a debt barred by limitation it is valid without consideration Example: A is indebted to C for 60,000 but the debt is barred by the Limitation Act. A signs a written promise now to pay 50,000 in nal settlement of the debt. This is a contract without consideration, but enforceable. .4. Agency: no consideration is necessary to create an agency
5. Completed gift: In case of completed gifts, the rule no consideration no contract does not apply.Explanation (1) to Section 25 states "nothing in this section shall a ect the validity as between the donor and donee, of any gift actually made." Thus, gifts do not require any consideration. 6. Bailment: No consideration is required to e ect the contract of bailment (Section 148) .7. Charity: If a promisee undertakes the liability on the promise of the person to contribute to charity, there the contract shall be valid. (Kadarnath v. Gorie Mohammad)
Multiple Choice Questions 1. Which of the following statement is false? Consideration: . (a) Must move at the desire of the promisor. (b) May move from any person . (c) Must be illusory (d) Must be of some value 2. Consideration must move at the desire of . (a) Promisor (b) Promisee . (c) Any other person (d) Any of these . 3. Consideration may be (a) Past (b) Present . (c) Future (d) All of the above
. 4. Consideration in simple term means: . (a) Any this in return (b) Something in return . (c) Everything in return (d) Nothing in return 5. Which of the following is not an exception to the rule No consideration, No Contract (a) Compensation for involuntary services (b) Love & A ection . (c) Contract of Agency (d) Gift Answers to MCQs . 1 (c) 2 (a) 3 (d) 4 (b) 5 (a)
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