 Submitted by Faisal Akbar

Department of law

Semester 3rd (A)

Submitted to prof Abdul SAMMAD

Synopsis
Consideration
Legal Rules Regarding Consideration
Difference between promisee and
promisor
Principle
Consideration must move from Promisee
to Promisor
illustration
Example
Case regarding promisee consideration
CONSIDERASTION
According to section” 2D” of contract act when
at the desire of the promisor, the promisee or any other person has done or abstained
from doing or does or abstain from doing, or promises to do or abstain from doing
something, such act or abstinence or promise is called a consideration of the promise.

Explanation
Payment or money a vital element in the law of contracts, consideration is a benefit
which must be bargained for between the parties, and is the essential reason for a
party entering into a contract. Consideration must be of value (at least to the parties),
and is exchanged for the performance or promise by the other party (such
performance by the other party) such performance itself is consideration. In a
contract, one consideration thing given is exchange for another consideration.

Legal Rule regarding consideration

There are number of common issues as to whether consideration exists in a contract. Under
English law;
1. Part payment is not good consideration.
2. Consideration must move from the promise but need not flow to the promisor.
3. Consideration must be sufficient but need not be adequate.
4. Consideration cannot be illusory.
5. Consideration must not be in past. Past consideration is not good consideration.
6. Moral consideration is not sufficient [ except for contract by deed, where” love and
affection “is often cited as the (unnecessary) consideration].
7. Performance of existing duties is not good consideration.
Meanwhile the contract act 1872 which provides that valid consideration exists when at
the desire of the promisor, the promisee or any other person has done or abstained from
doing , or does to abstains from doing, or promises to do or abstain from doing something
or in other word when party receives something in returns for entering into contractual
obligation. An agreement must be supported by a lawful consideration on both sides.
under the act, valid consideration must satisfy the following criteria.
 It, must move at the desire of the promisor. An act constituting consideration must
have been done at the desire or request of promisor. If it is done at the instance of
a third party or without the desire or request of the promisor, it will not be good
consideration. For example “ A” saves “B” goods from the fire without being ask
him to do so. “A” cannot demand payment for his service.
 “Consideration may move at the desire of promise or any other person. Under
contract act consideration may move from the promisee to any other person. i.e.,
even a stranger. This means that as long as there is consideration for the promisee,
it is immaterial who has furnished it.
 Consideration must be an act, abstinence or forbearance or a returned promise.
Consideration may be in past, present or future. Past consideration is not
consideration according to English law. However, it is consideration as per contract
law. Example of past consideration is “A” renders some service to “B” at letter’s
desire. After month “B” promises to compensate “A” for service rendered to him
earlier. When consideration is given simultaneously with promise, it is said to be
present consideration. For example, "A" receives Rs.50/- in return for which he
promises to deliver certain goods to "B". The money "A" receives is the present
consideration. When consideration to one party to other is to pass subsequently to the
maker of the contract, is said to be future consideration. For example "A" promises
to deliver certain goods to "B" after a week. "B" promises to pay the price after a
fortnight, such consideration is future.
Consideration must be real. Consideration must be real, competent and having
some value I the eyes of law. For example, "A" promises to put life to "B"'s dead
wife, if "B" pay him Rs.1000/-. "A"'s promise is physically impossible of
performance hence there is no real consideration.
Consideration must be something which the promisor is not already bound to do. A
promise to do something what one is already bound to do, either by law, is not a good
consideration. since it adds nothing to the previous existing legal consideration.
Consideration need not be adequate. Consideration need not necessarily be equal in
value to something given. So long as consideration exists, the courts are not
concerned as to adequacy, provided it is for some value.
“Since a person furnishes no consideration, they take no part in the bargain and, as
such, no part in the contract.

Principles Of Consideration
There are several principles applicable to consideration in contract law. These are:

That consideration is the price paid for promisor’s promise;

That the person who wants to enforce the promise must be the one who has paid for it
– either the promisee or someone acting on their behalf;
That the consideration does not have to be paid to the promisor. The promisor may
allow the consideration to be paid to a third party;
That consideration does not always have to be a benefit paid to the promisor. It can
also be a detriment suffered by the promisee in reliance on the promise;
That consideration cannot be something that has occurred in the past and predates the
promise;
That consideration must be something valuable in the eyes of the law. However, the
value does not have to equal the promisor’s promise;
That reasons for the offer making an offer or motive for making an offer is
completely separate to consideration;
That forbearance or refraining from doing something can be valid consideration;
Where an act, promise or forbearance cannot constitute consideration

There are some situations where an act, promise or forbearance cannot be taken to be
legal consideration in contract law. These situations are where there is some existing
duty to do these things, and they are either done either:

In performance of an existing duty or

In the discharge of an existing duty or ending contractual obligations.
Where the act, promise or forbearance is made in performing an existing duty, the
existing duty can be to the public, the promisor or a third party, for it to not constitute
proper consideration in contract law.

Where parties that are contracting seek to end an obligation under a contract, there
must be some consideration for discharging that obligation. Otherwise, the original
contractual obligations may still apply. The performance or forbearance that is the
consideration for the discharge of the obligation or obligations must be something
different to the obligation under the original agreement.

Promissory Estoppel
In some situations, even where there is found to be no consideration in contract law, a
remedy may be available where one party has acted on a representation made by
another party. The doctrine that governs this situation is called promissory estoppel.
 This doctrine stops a party from going back on a promise where it would be
unconscionable to do so.

The elements for a successful claim of promissory estoppel are:

There is a pre-existing legal relationship between the relevant parties;

A promise, undertaking or assurance has been made;
There has been reliance by one party on that promise, undertaking or assurance;
Detriment has been suffered by one party due to acting on the promise, undertaking
or assurance;
The party who seeks to withdraw from their promise, undertaking or assurance, has
acted unconscionably.
A court will consider the detriment suffered and seek to remove that detriment as
relief for an aggrieved party which successfully brings a claim for promissory
estoppel.

Promissory estoppel cannot be brought as a new cause of action. That is to say that
the party pleading promissory estoppel must have a cause of action that is
independent of promissory estoppel. Further, promissory estoppel does not override
the requirement for consideration in contract law. It also does not make voluntary
promises enforceable. The doctrine of promissory estoppel also does not terminate
the rights of a promisor. It merely suspends them.

Difference between promisee and promisor

Contract law teaches us whether a promisor is legally obligated to keep his promise.
The person making the promise is called the promisor. The person to whom he
makes the promise is a promisee.

For example, if Mr. A promises to pay Mr. B $500 then A is the promisor and B is the
promisee. Contract law tells us whether Mr. A is liable if he breaks his promise.

If Mr. A promises to pay Mr. B $500 and Mr. B says, “Great! Now I can get that
tablet computer I always wanted”, Is A in legal trouble if he decides not to pay?
Contract law tells us whether the promisor, Mr. A, must keep his promise.

Contract law in the United States usually requires some sort

of consideration (bargained for exchange of value) before a court will require a
promisor to keep his promise. In our example above, the promisor promised to give
Mr. B $500 but he did not get anything in return. Probably, a court will hold that
Mr. A, the promisor, does not need to keep his promise, because there was no
exchange of value (no consideration) between the parties.
A promisor is someone who makes a promise to a promisee.

Consideration must move at the desire of the promisor: An act shall not be a valid

consideration for the promise unless it is done at the desire of the promisor. So the act or

abstinence must be done or promised to be done at the desire of the promisor. It is not

necessary that the promisor himself should be benefited by his act, but his desire is essential.

Example: D, on the order of the Collector of a district, built at his own expense certain shops

in a bazar. The shops were occupied by different shopkeepers who promised to pay D a

commission on articles sold. In a suit filed by D to recover the commission it was held. that

the promise was not supported by consideration since the market was not constructed at the

desire of the shopkeeper but the District Collector.

Consideration may be past, present or future: Where the promisor has received

consideration before the date of the promise, it is past consideration. When the promisor

receives consideration simultaneously with his promise, it is present consideration. Where the

promisor has to receive consideration in future for his promise, it is future consideration.

Consideration need not be adequate: Section 25 clearly provides that an agreement to

which the consent of the promisor is freely given is not void merely because the

consideration is inadequate. This means that consideration need not be adequate to the

promise.

Consideration may be an act or abstinence or promise: Consideration may be a promise to

do something or not to do something. So it may be either positive or negative.

Consideration may move from promisee to

promisor
Its means that a person to whom a promise is made only he can enforce the promise if they
had provided consideration for it.
Consideration must be at the desire of promisor (SECTION 2D)
It is essential that the consideration must have been given at the desire of promisor, rather
than merely voluntarily or at the instance of some third party.
English contract law has traditionally required that consideration moves from promisee,
though this rule has now been affected by the contracts (right of the third party)
Where traditional rule applies, a person to whom a promise has been made can enforce it if
they provided consideration for it.
: It is not necessary_that the consideration must move from the promisee. As long as there is
a consideration, it is not important who has given it. Therefore, a stranger to consideration
can sue on a contract provided he is not a stranger to contract.

For example
If “A” promises to wash “B” car if “B” promises to pay,”C”10$, then if “A” does, in fact
wash the car and “B” subsequently fails to pay the 10$ to “C” “C” cannot enforce the
contract against “B” since “C” has not furnished any consideration. It may, of course, be
possible for “A” to enforce the promise against B. The rule is really a corollary of the rule
that only the parties to a contract can sue on the contract.

AN illustration of the rule may be seen in Tweddle v Atkinson “1861”

where the partners’ father’s each agreed to pay a sum of money to the new husband after

a marriage and agreed between themselves that the husband would have a right of action

to sue should either parent fail to pay. The wife’s father died before he could make the

payment and his executors refused to pay. The husband sued the executors. It held that his

action must fail because he had furnished no consideration under the agreement.

“It should be noted that whilst the consideration must move from the promisee, it need

not move to the promisor. The promisee may suffer some detriment at the request of the

promisor which may confer no benefit on the promisor.

Consideration must have some value

 The rule is that consideration must be sufficient but need not to adequate.

What this means it that the law requires the parties to have entered into a bargain where

each side has provided something of value that the courts can see. The courts are not

generally interested in whether this is the full market value, or whether the contract is a

fair bargain. That is for the parties to negotiate for themselves. The term “sufficiency”

describes something that the courts can see of value that makes the bargain binding,

whilst “adequacy” may describe the full value of something. Hence, the law requires

consideration to be something of sufficient value, but not necessarily the full or adequate

market value.

No Consideration, No Contract – Explain This Rule With

Examples
A promise without consideration cannot create a legal obligation. The general rule is that an
agreement made without consideration is void. This rule is contained in Section 25 of the
Contract Act, which declares that ‘an agreement made without consideration is void’. This
means that consideration is a must in all the cases. But this Section provides certain
exceptions where an agreement is valid even without consideration. These cases are;

Agreement made on account of natural love and affection: An agreement without

consideration is enforceable if, it is expressed in writing and registered under the law for the

time being in force for the registration of documents, and is made on account of natural rove

and affection, between the parties standing in near relation to each other.
Case Regarding promisee consideration

SYNOPSIS

1 CASE

2 INTRODUCTION

3 FACTS

4 ISSUES

5 HELD

6 COMMENT

INTRODUCTION

This case is based on the offer made to a particular person. In Contract Law, an offer is a

promise in exchange for performance by other party. An offer can be revoked or

terminated under certain conditions.

KINDS OF OFFER

There are two kinds of offer which are as follows:-

GENERAL OFFER – General offer is made to the public at large. It may be accepted by

any person who fulfills the necessary conditions.

SPECIFIC OFFER – Specific offer is made to a particular person. No right of action

accrues to persons other than those to whom the offer is made.

FACTS

The defendant i.e. Jones sent a written order for goods to a shop which is owned by

Brocklehurst and which was addressed to him by name. Unknown to the defendant,

Brocklehurst had earlier that day sold and transferred his business to Boulton.But Boulton

fulfilled the order and delivered the goods to the defendant without notifying him that he

had taken over the business. The defendant accepted the goods and consumed them in the

belief that they had been supplied by Brocklehurst. When he received Boulton’s invoice

he refused to pay it claimimg that he had intended to deal with Brocklehurst personally,

since he had dealt with them previously and had a set-off on which he had intended to

rely.

ISSUES

1 Is whether Jones is liable to pay Boulton?

2 Is it the duty of the Brocklehurst or Boulton to inform about the takeover of the

business to Jones?

3 Can Boulton claim the amount of the goods which was used by the Jones?

HELD

The court held that the defendant i.e. Jones was not liable for the price. When a Contract

is made for the identity of the person is important to the Contract. Hence, there was no

Contract. “POLLOCK” said that the rule of law is clear, that if you propose to make a

contract with A, then B cannot substitute himself for A without your consent and to your

disadvantage, securing to himself all the benefit of the contract.

“MARTIN B” said that where the facts prove that the defendant never meant to contract

with A alone, B can never force a contract upon him, he was dealt with A, and a contract

with no one else can be set up against him.

“BRAMWELL B” said that I do not lay it down because a contract was made in one

person’s name another person cannot sue upon it, except in cases of agency.

“CHANNELL B” said that the plaintiff is clearly not in a situation to sustain this action,

for there was no contract between himself and the defendant. The case is not one of

Principal and agent; it was a contract made with B, who had transactions with the

defendant and owed him money, and upon which A seeks to sue.” So, the Jones will not

be liable to pay {Section 64 will also apply} which talks about rescissions of a voidable

contract.