CONTRACT ASSIGNMENT

TOPIC:- CONSIDERATION

SUBMITTED BY :- SUBMITTED TO :-

NAME :- AVINASH KUMAR MISHRA Dr. EQBAL HUSSAIN

COURSE : - [Link].B (HONS)(1ST YEAR)

SEMESTER :- 1ST

SECTION :- A
 ACKNOWLEDGEMENT

I am using this opportunity to express my gratitude to everyone

who supported me throughout the course of this CONTRACT
ASSIGNMENT . I am thankful for their aspiring guidance, invaluably
constructive criticism and friendy advice during the project work. I am
sincerely grateful to them for sharing their truthful and illuminating views on
a number of issues related to the project.

I express my warm thanks to my contract sir Dr. Eqbal Hussain for

his exemplary guidance.
I also take this opportunity to thank the staff of JAMIA MILIA ISLAMIA
who supported me very much in making of this project specially the
LIBRARY members who guided me in searching and providing the right
book.

Lastly I want to thank my friends and family who are with me and
supported me whenever I needed to complete this project,and without
whose help this assignment might not be so fruitful .

Thank you,

AVINASH KUMAR MISHRA

 CONTENTS :-
INTRODUCTION :-
CONTRACT
THE ELEMENTS OF A CONTRACT

VARIOUS DEFINITIONS as per Indian contract act 1872

CONSIDERATION
Lawful consideration
Consideration in the Indian Contract Act,
1872

Privity to Contract
Consideration may be Past, Present or Future (Executory)

Consideration Received by one of the Joint Promisors.

Consideration Need Not be Adequate

Exception to the Rule in Pinnels Case

ONE IMPORTANT CASE
 AN INTRODUCTION
CONTRACT:-
Contracts are agreements entered into by two
parties with the intention of creating a legal obligation and contracts in
law are very important and serious documents. Yet many individuals or
business owners do not fully understand the implications of signing a
contract or breaching a contract.
As per section 2(h) :- An agreement enforceable by Law
is a contract. Therefore, there must be an agreement and it should
be enforceable by law

THE ELEMENTS OF A CONTRACT

Typically, in order to be enforceable, a contract must involve the following

elements:-

A "Meeting of the Minds" (Mutual Consent)

The parties to the contract have a mutual understanding of what the contract
covers. For example, in a contract for the sale of a "mustang", the buyer thinks he
will obtain a car and the seller believes he is contracting to sell a horse, there is no
meeting of the minds and the contract will likely be held unenforceable.

Free Consent

To constitute a valid contract, there must be free and genuine consent from the parties
to the contract. It should not be obtained by: FRAUD , MISREPRESENTATION e.t.c
Sections 13, 14, 15, 16, 17, 18, 19, 19A, 20, 21 and Section 22 of the Indian
Contract Act, 1872 lay down the rules that define Free Consent.
 Proper offer and proper acceptance

There must be an agreement based on a lawful offer made by person to

another and lawful acceptance of that offer by the latter. Section 7 and Section 8 of the
Indian Contract Act, 1872 lay down the rules that define valid acceptance.

Lawful consideration
An agreement to form a valid contract should be supported by consideration.
Consideration means something in return (quid pro quo). It can be cash, kind, an act
or abstinence. A promise from the Promisee to Promisor can also be consideration. It
can be in the present or in the future. Consideration should be real and lawful in its
entirety and of non-fictional. Section 23, 24 and 25 of the Indian Contract Act, 1872 lay
down the rules that define lawful and valid consideration.

Capacity of parties to Contract

In order to convert agreement into a contract, the parties to the contract must be
competent to Contract. According to section 11 of the Contract Act, a person is
considered to be competent to contract if he satisfies the following criterion:

The person has reached the age of majority in accordance to the law to which he
is subject (Section 11)
The person is of sound mind. (Section 11, 12)
The person is not disqualified from contracting by any law to which he is subject.
.
Lawful Object and Agreement

The object of the agreement must not be illegal or unlawful.

Object of the Contract means Objective. Object cannot be of murdering someone or
inflicting him with bodily harm.

Agreement not declared void or illegal

Agreements which have been expressly declared void or illegal by law are not
enforceable at law; hence they do not constitute a valid contract.
 Intention To Create Legal Relationships
For two parties to enter into a contract, Both the proposal and its
acceptance have to be such that it clearly establishes intent of the party to enter into
Contract.
If there is no such intention on the part of the parties. There is no contract between
them. Agreements of a social or domestic nature do not contemplate legal
relationship;as such they are not contracts. In Weeks vs Tybalds Case, it was held
that the intention to enter into Contract was absent.

Performance or Delivery

In order to be enforceable, the action contemplated by the contract must be

completed.

For example, if the purchaser of a piano pays the $1,000 purchase price,
he can enforce the contract to require the delivery of the piano. However, unless
the contract provides that delivery will occur before payment, the buyer may not be
able to enforce the contract if he does not "perform" by paying the $1,000.
Similarly, again depending upon the contract terms, the seller may not
be able to enforce the contract without first delivering the piano.

VARIOUS DEFINITIONS as per

Indian contract act 1872

1. Offer(i.e. Proposal) [section 2(a)]:- When person signifies to another his

willingness to do or to abstain from doing anything, with a view to obtaining the assent
of the other person to such act or abstinence, he is said to make a proposal.

2. Acceptance 2(b):- When the person to whom the proposal is made,

signifies his assent there to, the proposal is said to be accepted.

3. Promise 2(b) :- A Proposal when accepted becomes a promise. In

simple words, when an offer is accepted it becomes promise.
4. Promisor and promisee 2(c) :- When the proposal is accepted, the
person making the proposal is called as promisor and the person accepting the
proposal is called as promisee.

5. Consideration 2(d):-
When at the desire of the promisor, the promise or any other person
has done or abstained from doing something or does or abstains from doing
something or promises to do or abstain from doing something, such act or abstinence or
promise is called a consideration for the promise. Price paid by one party for the
promise of the other Technical word meaning QUID-PRO-QUO i.e. something in
return.

6. Agreement 2(e) :- Every promise and set of promises forming the

consideration for each other. In short,

7. Contract 2(h) :- An agreement enforceable by Law is a contract.

Therefore, there must be an agreement and it should be enforceable by law.

8. Void agreement 2(g):- An agreement not enforceable by law is void.

9. Voidable contract 2(i):- An agreement is a voidable contract if it is

enforceable by Law at the option of one or more of the parties there to (i.e. the
aggrieved party), and it is not enforceable by Law at the option of the other or others.

10. Void contract :- A contract which ceases to be enforceable by Law

becomes void when it ceases to be enforceable.
According to Section 10, "All agreements are contracts if they are made
by the free consent of parties competent to contract, for a lawful consideration and with
a lawful object, and are not hereby expressly declared to be void."
 CONSIDERATION

Lawful consideration

According to Section 2(d), Consideration is defined as: "When at the desire

of the promisor, the promisee has done or abstained from doing, or does or
abstains from doing, or promises to do or abstain something, such an act or
abstinence or promise is called consideration for the promise. "Consideration"
means to do something in return.
In short, Consideration means quid pro quo i.e. something in return.
An agreement must be supported by a lawful consideration on both sides.

Essentials of valid considerations are

It must move at the desire of the promisor. An act

constituting consideration must have been done at the desire or
request of the promiser. If it is done at the instance of a third party or
without the desire of the promisor, it will not be good considsration.
For example "A" saves "B"'s goods from fire without being ask him
to do so. "A" cannot demand payment for his service.

Consideration may move from the promisee or any other

person. Under Indian law, consideration may be from the promisee of
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 forebearance or
a returned promise.
 Consideration may be past, present or future. Past
consideration is not consideration according to English law. However
it consideration as per Indian law.

Example of past consideration is, "A" renders some

service to "B" at latter's desire. After a 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 in 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 promiser 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 be necessarily be equal to value to something given. So long as
consideration exists, the courts are not concerned as to adequacy,
provided it is for some value.
The consideration or object of an agreement is lawful, unless
and until it is:
1. forbidden by law: If the object or the consideration of an
agreement is for doing an act forbidden by law, such agreement
are void. for example,"A" promises "B" to obtain an employment
in public service and "B" promises to pay Rs one lakh to "A". The
agreement is void as the procuring government job through
unlawful means is prohibited.
2. If it involves injury to a person or property of another: For
example, "A" borrowed rs.100/- from"B" and executed a bond to
work for "B" without pay for a period of 2 years. In case of
default, "A" owes to pay the principal sum at once and huge
amount of interest. This contract was held void as it involved
injury to the person.
3. If courts regards it as immoral:An agreement in which
consideration ir object of which is immoral is void. For example,
An agreement between husband and wife for future separation is
void.
4. Is of such nature that, if permitted, it would defeat the provisions
of any law:
5. is fraudulent, or involves or implies injury to the person or
property of another, or
6. Is opposed to public policy. An agreement which tends to be
injurious to the public or against the public good is void. For
example, agreements of trading with foreign enemy, agreement to
commit crime, agreements which interfere with the administration
of justice, agreements which interfere with the course of justice,
stifling prosecution, maintenance and champerty.
7. Agreements in restrained of legal proceedings: This deals with two
category. One is, agreements restraining enforcement of rights and
the other deals with agreements curtailing period of limitation.
8. trafficking in public offices and titles:agreements for sale or
transfer of public offices and title or for procurement of a public
 recognition like padma vibhushanor padma sree etc. for monetary
consideration is unlawful, being opposed to public policy.
9. Agreements restricting personal liberty: agreements which unduly
restricts the personal liberty of parties to it are void as being
oppposed by public policy.
10. Marriage brokerage contact:Agreements to procure marriages
for rewards are void under the ground that marriage ought to
proceed with free and voluntary decisions of parties.
11. Agreements interfering marital duties: Any agreement which
interfere with performance of marital duty is void being opposed
to public policy. An agreement between husband and wife that the
wife will never leave her parental house.
12. consideration may take in any form-money,goods, services, a
promise to marry, a promise to forbear etc.

Consideration in the
Indian Contract Act, 1872

The section 25 of the Indian Contract Act, 1872 openly

declares that an agreement madewithout consideration is voidIn o th er
wo r d s t he p r es enc e o f co ns id e r at io n i s an essential for a contract to
be valid. In England too promises without consideration arenot enforced,
because they are gratuitous.

In England the contracts are divided into two categories

:[Link] under seal, or contracts in the form of a deed. Such contracts

are valideven without consideration
.[Link] contracts or parol contracts. For validity of such contracts the
presence of consideration is [Link] in simple words means
something in return of a promise which may either be benefit gained by one
party or something lost by the other. So generally there can beno doubt that
for a valid contract, there must be consideration, and also free consent.

Definitions of Consideration
According to Blackstone
:Consideration is the recompense given by a party contracting to
the [Link] the price of the promise

.Sir Fredrik Pollock summarized the position of words adopted by

the House of Lords in1915: An act of forbearance of one party or the
promise thereof is the price for whichthe promise of the other is bought, and
the promise thus given for value is enforceable.

Definitions of Consideration under Section 2(d)

Section 2 (d), The Indian Contract Act, 1872 defines consideration as given
under:When, at the desire of the promisor, the promise or any other person has
done or abstained from doing, or does or abstains from doing or promises
to do or abstain fromd o i n g so me t h ing , s u ch a c t o r a bs ti n en c e o r
p r o mi s e i s c al l ed a c o n si de r a ti on f o r th e promise.

Essentials of Consideration

1. Consideration at the Desire of the Promisor

The definition of consideration under section 2(d) clearly emphasizes that

theconsideration must be given at the desire of the promisor, rather than merely
voluntary or at the instance of some third [Link] the case

Durga Parsad v Baldeo

The plaintiff, on the order of the Collector of the town, built at his
own expense,certain shops in a bazaar. The shops came to be occupied by the
defendants
who,in c on s id e r a ti on o f th e pl a int if f h a vi ng e xp en de d mo n e y i n t h e
c o ns t ru c ti on , promised to pay him a commission on his articles sold through
their agency in the bazaar. The plaintiffs action to recover the commission was
rejected. It was held because as the construction had not been done as per the
desire of the defendants, bu t th e o rd e r o f t he c ol l e ct o r . He n c e , t h e
c o ns id e r at io n was n ot v al id a nd the defendants not liable for the same.

2. Consideration by Promisee or any other Person(Privity of Consideration)

According to the Indian Law

,Consideration may be given by the promisee or any other person. It means

that as long as there is a consideration for a promise, it is immaterial
who has furnished it. It may move from the promisee, or, if
t h e p r o m i s o r h a s n o objection, from any other person. But in English
Law the position is different, here theconsideration must move from the
promisee himself.

For example, A promises to give his watch to B and a consideration of

Rs.5000 for the same is given to A by C and not B himself. This will not be a
valid contract in England but in India it will be valid as the

section 2(h) clearly states that at the desire of the promisor, the promisee or
any other p e r son ma y
p r ov id e c ons id e ra t io n . Thi s c an be f u r th e r un d er st o od in t he c a s e
of

Chinnaya v Ramaya

In this case A, an old lady granted her estate to her daughter (thedefendant) with
a direction that the daughter should pay an annuity of Rs.653, to
As b r o th e rs ( th e p l ai nt i f fs ) . On the s a me d a y, t h e de f e n da nt s
ma d e a p r o mi s e wi t h th e plaintiffs that she would pay the annuity as directed
by A. The defendant failed to pay thestipulated sum. In an action against her
by the plaintiffs she contended that since the plaintiffs themselves had
furnished no consideration, they had no right of action. TheMadras High
Court held that in this agreement the consideration had been furnished
byt h e d e f e n d a n t s mo t h e r a n d t h a t i t wa s e n o u g h c o n s i d e r a t i o n t o
e n f o rc e t he p ro mi s e between the plaintiff and the [Link] the above case
it can be seen that A enters in a contract with B, but A himself has notgiven any
consideration to B, but the consideration has been provided by third party i.e. Cto
B. Although A is a stranger to consideration, he can still enforce the contract
against [Link] has to remember that this is only true under Indian Law and the
situation is differentun d e r Eng li sh La w wh e r e t h e co ns id e r a ti on c an
o nl y mo v e f r o m t h e p ro mi s e e a n d a stranger to the consideration in no
condition can maintain any action.

Privity to Contract

The Doctrine of Privity of Contract in simple words means that only those persons
who are parties to the contract can enforce the same. A stranger to the contract
cannot enforcea contract even though the contract may have been for his
benefit. To explain it with an example, if there is a contract between A
and B whose benefit has been conferred uponC, C cannot file a suit to enforce
the contract because only A and B are the parties to thecontract and C is a stranger
to the [Link] rule has to be differentiated from the rule stated earlier according
to which inIndia a person who is a stranger to the consideration can sue. This does
not affect the rule of Privity of Contract.

Tweedle v Atkinson

the plaintiff was to be married o the daughter of one X and inconsideration

of this intended marriage X and the plaintiffs father entered into a
writtenagreement by which it was agreed that each would pay the plaintiff
a sum of money. Xfailed to do so and the plaintiff sued his executors.
Whitman J considered it to be an
e s t ab l i sh ed p ri n ci pl e t h a t n o st r an g e r t o th e co ns id e r a ti on c an t a
k e a dv a nt ag e o f a contract, although made for his benefit. Thus,
although the sole object of the contractwas to secure a benefit to the
plaintiff, he was not allowed to sue as the contract was made with his
father and not with him.

3. Consideration may be Past, Present or Future (Executory)

Section 2(d) of the Indian Contract Act, 1872, recognizes three types of
consideration,namely, Past, Executed and Executory. It says that when at the desire
of the promisor, the promisee or any other person:

[Link] done or abstained from doing, (the consideration is Past.)

[Link] or abstains from doing, (the consideration is Executed or

present.)
[Link] to do or abstain from doing, (the consideration is Executory
or future.)
These have been discussed in detail as under

Past Consideration

Past consideration means that the consideration for the promise had been given
earlier and the promise has been made afterwards. It is, of course, necessary that at
the time theact constituting consideration was done, must have
been done at the desire of the promisor.

For example in lost or found cases if A looses his watch and puts out a noticethat
whoever finds it will get Rs.500 as reward. The person who finds it has already
donethe consideration. This amounts to valid (past) consideration under Section
2(d), and the promise is enforceable. The words has done and abstained from
doing, in Section 2(d)of the Indian Contract Act, 1872, according to Pollock and
Mulla

declare the law to be that an act done by A at Bs request, without any

contemporaneous promise from B, may be consideration for a subsequent promise
from B to A.
Mst. Dan Kuer v. Sarla Devi, A.I.R. 1947 P.C. 8: I.L.R. (1946) All.756: (1947) 49
Bom. L.R. 12

Past services voluntarily rendered [Section 25(2)]

A voluntary service means a service rendered without any

request and there is nosubsequent promise for the same. For example if a person A
has lost his watch andanother person B finds it and returns it to A and now asks A
to give him a reward for thesame, A is not liable for the same as A has not made
any prior promise for the reward andthis is not a contract. The following
illustrations also show the difference:1.A finds Bs purse and gives it to him. B
promises to give A Rs.50. This is a contract.

English Law Regarding to Past Consideration

According to English law if the act has been done before any promise is made,
it is called past consideration and a past consideration is no consideration.

The past act may explain why the promise was given and may, thus, be a motive
for the promise, but it furnishes no legal consideration.

The consideration and the promise ought to gotogether.

Past consideration at the Promisors Request

Past consideration in lieu of a prior request by the promisor is deemed to be a

goodconsideration. It was established as early as 1616 as in the case of

Lampleigh v Barthwait

that a past act done at request will be good consideration for a

subsequent promise. The facts were as given on the next page:The defendant,
having committed a murder, requested the plaintiff to labour andto do obtain
pardon from the King. The plaintiff did his best to obtain the Kings pardon, riding
and journeying at his own expense. Afterwards the defendant promised the
plaintiff to give him 100 and then refused to pay. He was, however,held [Link]
this context there is not much difference between the Indian and English laws.
Indianlaw recognizes past consideration, when the same is given at the desire of
the [Link] act
done voluntarily is no consideration either in India or England. In India,however, a
voluntarily done consideration can render an agreement valid if it is declared

valid under exception mentioned in Section 25(2). There is no such provision

under English law.

Executed or Present Consideration

When one of the parties to the contract performs his part of the promise which
constitutesthe consideration for the promise by the other side is called executed
consideration andthe performance of the promise by the other side is the only thing
now to be done. For example, A makes an offer to reward Rs. 100 to anyone who
his lost phone and bringsthe same back to him. B finds the lost item and delivers it
to A. When B does so itamounts to acceptance of the offer which results into a
binding contract under which Awill have to pay Rs.100 to B, and also
simultaneously giving consideration for thecontract (i.e. the lost object).

The consideration in this case is

[Link] consideration is different from past consideration as executed
consideration is provided simultaneously along with the making of the contract
while pastconsideration is provided prior to the making of the contract.

Executory or Future Consideration

When a person makes a promise in exchange of the promise made from the other
side,the performance of this promise is to be done after making the contract. This
is calledExecutory consideration. For example, A agrees to sell and B to buy a
quantity of goodsat a stated price. In other words, A has promised to sell and B has
promised to [Link] Act, Abstinence or Promise by the Promisee Constitutes
ConsiderationAccording to Section 2(d), when at the desire of the promisor, the
promisee or any other person has done or abstained from doing, or does or
abstains from doing, or promises
notto do or abstain from doing something, suchact or abstinence or promise is
called consideration for promise. It means that if nothing is done in exchange for
the promise, i.e., where there is no act, abstinence or promise, there is no
consideration.
 Consideration Received by one of the Joint Promisors.

In case there are joint promisors but consideration has been received by any one of
them,then it is held that the consideration is sufficient and binding on others also.
In

Andhra Bank v Anantnath Goel

the father received a loan from the bank by the deposit of title-deeds of his
immovable property, but the promissory note, to repay the loan with interest,was
signed by the father and his son jointly, in favor of the bank. It was held that the
sonwas equally liable with his father on the said promissory note, even though he
himself

Consideration Need Not be Adequate

It is not necessary for the consideration to be adequate to the promise. The courts
canhardly assume the task of setting what is the appropriate consideration for the
[Link] to Explanation 2 to Section 25 of the Contract Act, 1872:An
agreement to which the consent of the promisor is freely given is not
voidmerely because the consideration is inadequate; but the inadequacy of the
considerationmay be taken into account by the Court in determining the question
whether the consentof the promisor was freely [Link] parties are free to make
the consideration of their choice. The adequacy of theconsideration is for the
parties to consider at the time of making the agreement, not for the court when it is
sought to be enforced.

For example, A agrees to sell his house worthRs.1,00,00,000 for

Rs.1,00,000. As consent to the agreement was freely given. The agreement is a
contract notwithstanding the inadequacy of the consideration

Consideration must be real

It is necessary for consideration to be real and should not be unsubstantial. In

 White v Bluett

A son used to complain to his father that his brothers had been given more property
then him. The father promised that he would release the son from his debt if
hestopped complaining. After the death of the father an action was brought by the
executors to recover the debt. It was held that the promise of not facing the father
with thecomplaints in future was not a good consideration for the fathers promise
to release himfrom the debt. Therefore the son continued to be liable for the debt

Performance of an Existing Legal Duty in no Consideration

Doing something what a person is already legally bound to do is not a

consideration. Butfor a proper consideration there should be a promise to do
something more than what a person is already bound to do. In Collins v Godefroy,

A received a subpoena , i.e. presence of a witness to testify, in

a case. Thereafter B promised to pay A some moneyfor the trouble caused to him
in appearing in that case. A sued to recover B for theamount promised. It was held
that A was already under a public duty to give evidenceand that the consideration
to pay by B did not constitute a good consideration

Exception to the Rule in Pinnels Case

The various recognized exceptions to the rule, which are as given on the
below:

[Link] in kind When the promise to deliver some movable property or

assetsin lieu of a due sum, the promise is valid is these assets are of smaller value
thanthe amount due.

[Link] before due date Payment of a lesser sum before time, or different
modeor at a different place than appointed in the original contract
.[Link] payment by third party A part payment made by a third party may be
agood consideration for the discharge of the whole of the debt. In other words
if one party has already accepted a part payment from the third party then he
cannotsue for the balance of the amount.

[Link] with the creditors Payment of a lesser amount in satisfaction of

alarger sum where this is done in pursuance of an agreement of
compromiseentered into by the debtor with his creditors.

[Link] Estoppel This is an equitable estoppel preventing a person

fromdenying what
he asserted earlier. The person making the representation or promise becomes
bound by the same, on the basis of promissory becomes bound by the same, on the
basis of the law of estoppel if another person acted in faith of the representation.
The promise is enforceable at the instance of the instance of the promisee
notwithstanding that there is no consideration for the promise.

Indian Law

In India such confusion is not likely to arise, for the Contract Act in
Section 63
clearly provides that every promise may dispense with or remit, wholly or i
n part, the performance of the promise made to him, or may extend the time for
such performance,or may accept instead of any satisfaction which he thinks fit.
The section also providesthe following illustrations

:1. A owes B 5,000 rupees. A pays to B, and B accepts, in satisfaction of the

wholedebt, 2,000 rupees paid at the time and place at which 5,000 rupees were
[Link] whole debt is discharged.2.A owes B 5,000 rupees. C pays to
B 1,000 rupees, and B accepts them insatisfaction of claim on A. this payment is a
discharge of the whole claim.3.A owes B under a contract, a sum of money, the
amount of which has not beenascertained. A, without ascertaining the amount
gives to B, and B, in satisfaction
hereof, accepts the sum of 2,000 rupees. This is a discharge of the whole
debt,whatever may be its amount.4.A owes B 2,000 rupees, and is also indebted to
other creditors. A makes anarrangement with his creditors, including B, to pay
them a compensation of eightannas in a rupee (i.e. 50%) upon their respective
demands. Payment to B of 1,000rupees is a discharge of Bs demand.

Forbearance to Sue is Consideration

Forbearing i.e. abstaining from enforcing the claim is a good consideration for a
promiseto pay or do some other act.

Forbearance to sue only constitutes consideration only sofar as the delay in the
proceedings is a benefit to the person intended to be sued. Promiseto forbear may
be implied and it may be forbearance only for unspecified time.

Exceptions when the Agreement is Valid without Consideration

Section 25 of the Indian Contract Act, 1872, generally declares that

an agreement without consideration is void. The Section, however, provides
exceptions to the rule stated as under:25. An agreement made without
consideration is void unless

[Link] is expressed in writing and registered under the law for the time being in
forcefor the registration of documents and is made on account of natural love and
affection between parties standing near relation to each other, or unless

[Link] is promise to compensate, wholly or in part, a person who has already

voluntarily done something for the promisor, or something which the
promisor who legally compellable to do; or unless

[Link] is a promise, made in writing and signed by the person to be charged there
with,or by his agent generally or specially authorized in that behalf, to pay wholly
or in part a debt of which the creditor might have enforced but for the law for the
limitation of [Link] any case of these cases, such an agreement is a contract
ONE IMPORTANT CASE :-

Babu Ram Budhu Mal And Ors. vs Dhan Singh Bishan Singh And
Ors. on 17 October, 1956

CASE FACTS :-
1. This regular second appeal arises out of a suit for recovery of Rs. 975 plus
interest. The suit was decreed by the trial Court. In appeal the decree was reversed and
the suit was dismissed. The facts which gave rise to this litigation were as follows:--

Jumma and others mortgaged (simple mortgage) 76 bighas of agricultural land for
Rs. 3,500 with the plaintiffs. Some time later partition of the land took place. Out of the
land falling to his share Jumma mortgaged with possession 25 bighas of land with
defendants Kaka Singh and Dhanna Singh. Out of the mortgage money Rs. 875 were left
with the defendants second mortgagees for payment to the plaintiffs. Defendants did not
pay the money to the plaintiffs. The latter, therefore, instituted the present suit for the
recovery of the money left by the mortgagor with the second mortgagees.

The suit was resisted by the defendants on the ground that there was no privity of
contract between them and the plaintiffs arid the latter therefore were not competent to
sue. The finding of the trial Court was in favour of the plaintiffs. It was reversed by the
lower appellate Court and the suit was dismissed on the ground that the plaintiffs being
strangers to the contract were not entitled to sue. Plaintiffs appeal

NOTE:- So fat as the first point is concerned, the law seems to be fairly well
settled. A stranger to a contract which reserves a benefit for him cannot sue upon it either
in English or in Indian Law even though in India the consideration need not move from
the promisee

JUDGMENT :- Gurnam Singh, J

In the result the appeal is dismissed with costs and the Judgment and
decree of the lower appellate Court are maintained.
 BIBLILOGRAPHY
BOOKS REFERRED
1 Dr. R. K. BANGIA (LAW OF CONTRACTS)

2 AVTAR SINGH (CONTRACT AND SPECIFIC RELIEF)

WEBSITE : -
1. [Link]

2. [Link]

3. [Link]

4. [Link]
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EYE ON MY ASSIGNMENT