1.

INTRODUCTION
Consideration is a fundamental element of contract law, ensuring that agreements are based
on a reciprocal exchange of value. Under English law, the principle that "past consideration is
no consideration" is well-established. This rule dictates that an act or promise made before an
agreement is formed cannot serve as valid consideration for a new promise. This principle is
rooted in the idea that for a contract to be enforceable, consideration must be
contemporaneous with or future-oriented, ensuring mutual benefit and a clear exchange of
value between the parties1

In contrast, Indian law takes a broader approach. According to Avtar Singh, the Indian
Contract Act, 1872, allows for past consideration to be valid under certain circumstances,
such as when a past act is performed at the request of the promisor. This flexibility contrasts
with the stricter English approach, where past consideration is generally excluded from
forming the basis of a contract unless exceptions apply2

This assignment will explore the validity of past consideration under both English and Indian
law, highlighting the differences and examining exceptions to the rule that past consideration
is no consideration. The analysis draws from key texts by Avtar Singh and the authoritative
commentary of Pollock & Mulla, which provide insight into the legal nuances and practical
implications of this principle.

2. CONSIDERATION

Consideration is a fundamental element of contract law, representing the value exchanged

between parties to make the contract legally enforceable. It ensures mutual obligation and
serves as the inducement for entering the contract. Without valid consideration, an agreement
is not considered legally binding.

2.1 Definition

Section 2(d) of the Indian Contract Act, 1872 defines consideration as:

1
Pollock & Mulla, The Law of Contract 15th ed., (Universal Law Publishing, 2020), p. 105.

2
Avtar Singh, Principles of the Law of Contract 10th ed., (Eastern Book Company, 2020), p. 43.

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"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 to do or abstain from doing
something, such act or abstinence or promise is called a consideration for the promise." 3

This section highlights three types of consideration:

1. Past Consideration: When the act is performed before the promise is made.

2. Present Consideration: When the act is done at the time the promise is made.

3. Future Consideration: When the act is promised to be done in the future.

The concept of consideration in English law, as outlined by Sir Frederick Pollock, stresses
that consideration must be something of value in the eyes of the law, but does not need to be
equivalent to the promise made, as long as it is sufficient to form a legally binding contract. It
should involve a "quid pro quo," where something is given in exchange for the promise.

2.2 Essential Elements of Consideration

For consideration to be valid, it must satisfy the following elements:

1. Mutuality of Obligation: Both parties must exchange something of value. Each

party’s promise or action must be given in return for the promise made by the other
party.

2. Legality of Consideration: According to Section 23 of the Indian Contract Act,

1872, consideration must be lawful. It cannot be for an illegal or immoral purpose.
For example, a promise to commit a crime is not valid consideration4.

3. Sufficiency of Consideration: The law does not require the consideration to be equal
in value to the promise being made. It must be "sufficient," meaning it must be of
some value in the eyes of the law. This was discussed in the case of Chappell & Co.
Ltd v. Nestlé Co. Ltd, where it was held that consideration need not be equivalent,
but must be something of value.

4. Consideration Must Move at the Desire of the Promisor: Section 2(d) emphasizes
that consideration must be provided at the desire of the promisor. For example, in

3
Indian Contract Act, 1872, Section 2(d) – Consideration.
4
Indian Contract Act, 1872, Section 23 – Lawful Consideration.

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 Durga Prasad v. Baldeo5, the court held that if the act is performed not at the request
of the promisor but at the request of a third party, then the contract is not enforceable
due to lack of valid consideration.

5. Consideration Need Not Be Adequate: The law does not insist on the adequacy of
consideration. A contract is still valid as long as there is some consideration, even if it
is not equivalent to the promise made. This principle was illustrated in Chappell &
Co. Ltd v. Nestlé Co. Ltd6, where it was held that a contract can still be enforceable
even if the consideration is minimal, provided it is lawful and sufficient.

2.3 Illustrations

Here are a few practical illustrations of consideration:

1. Example 1: P agrees to sell his car to Q for Rs. 50,000. Here, Q’s promise to pay Rs.
50,000 is the consideration for P’s promise to sell the car, and P’s promise to sell the
car is the consideration for Q’s promise to pay.

2. Example 2: A promises his debtor B not to file a suit against him for one year if A
agrees to pay him Rs. 10,000 more. Here, A’s abstinence from filing a lawsuit is the
consideration for B’s promise to pay Rs. 10,000.

3. PAST CONSIDERATION

3.1 Meaning and Scope

Past consideration refers to something done or suffered by the promisee prior to the promise
made by the promisor. It lacks the mutual exchange that is a prerequisite for valid
consideration in English contract law. According to the traditional doctrine of consideration,
an act already performed or a benefit conferred cannot serve as the foundation for a legally
enforceable promise.

Pollock and Mulla define past consideration as "a consideration which took place wholly
in the past, and for which the promise in question was not given in return." This reflects
the idea that consideration must involve a bargain and not merely an acknowledgment of a
past act or benefit.

5
Durga Prasad v. Baldeo, AIR 1884 All 125 (India).
6
Chappell & Co. Ltd v. Nestlé Co. Ltd, [1960] AC 87 (House of Lords, UK).

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3.2 Difference Between Past, Executed, and Executory Consideration

1. Past Consideration: Actions or benefits completed before the promise are made and
are not given in exchange for the promise.

o Example: A promises to pay B for services that B performed in the past

without any prior agreement.

2. Executed Consideration: Consideration is provided through the performance of an

act at the same time as the promise is made.

o Example: Payment upon delivery of goods in a sales contract.

3. Executory Consideration: A promise to perform an act in the future in exchange for

the promise of the other party.

o Example: An agreement to supply goods in the future for an agreed price.

The key distinction lies in the timing and mutuality of the exchange. Pollock and Mulla
emphasize that past consideration is not valid in the legal sense unless it falls under specific
exceptions, as outlined in case law and statute.

4. PRINCIPLE: PAST CONSIDERATION IS NO CONSIDERATION UNDER

ENGLISH LAW

4.1. Foundational Concept

The maxim “past consideration is no consideration” is fundamental in contract law. It

underscores the requirement of reciprocity in consideration, meaning that the consideration
must be given in exchange for the promise. A past act cannot fulfill this criterion because it is
not induced by the promise. Pollock and Mulla articulate that "consideration must be given
as part of the same transaction which gives rise to the promise."

4.2. Historical Jurisprudence

The foundational concept was solidified in the English common law, emphasizing that for a
promise to be enforceable, consideration must form part of the agreement at the time it is
made. This principle has been recognized as essential in distinguishing enforceable contracts
from gratuitous promises.

4.3. Judicial Precedents

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 1. Roscorla v. Thomas (1842)7

I. Facts: The defendant sold a horse to the plaintiff. After the sale, the defendant
promised that the horse was free from any vice. The promise was later found
to be untrue, and the plaintiff sought enforcement of the promise.

II. Held: The court ruled that the promise was unenforceable as it was not
supported by consideration at the time it was made. The sale was already
completed, and the subsequent promise lacked consideration.

Analysis by Pollock and Mulla: This case establishes that past consideration cannot support a
new promise. They note that "a promise made after the transaction is completed, without
prior understanding, is merely gratuitous."

2. Eastwood v. Kenyon (1840)8

I. Facts: A guardian (Eastwood) had raised and educated Sarah, incurring

expenses. After Sarah married Kenyon, Kenyon promised to pay Eastwood’s
expenses. Kenyon later defaulted on the promise.

II.

III. Held: The court ruled that Kenyon’s promise was not enforceable as it was
based on past consideration.

Analysis by Pollock and Mulla: They remark that "the court repudiated the notion that
moral obligations or past benefits could substitute for consideration under the law."

3. Re McArdle (1951)9

I. Facts: Improvements were made to a property by McArdle. After the work

was completed, the beneficiaries of the property promised to reimburse
McArdle. The promise was not fulfilled, leading to litigation.

II. Held: The promise was deemed unenforceable as it was based on past
consideration.

7
Roscorla v. Thomas (1842) 3 QB 234.
8
Eastwood v. Kenyon (1840) 11 Ad & E 438, 113 ER 482.
9
Re McArdle [1951] Ch 669.

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Pollock and Mulla's Commentary: This case reinforces the doctrine that consideration must
have a quid pro quo; promises made after the completion of an act are not legally binding
unless exceptions apply.

4.4. Exceptions to the Rule of Past Consideration under English Law

1. Act Done at the Promisor’s Request
I. If an act was performed at the promisor's request, and the promisor later
promises to pay for it, the past act can serve as valid consideration.
II. Case Reference: Lampleigh v. Brathwait (1615)10.
2. Previous Obligation that is Later Ratified
I. When a party voluntarily performs an act and the other party subsequently
agrees to compensate, the promise is enforceable, provided the act was not
gratuitous.
II. Case Reference: Pao On v. Lau Yiu Long (1980)11.
3. Moral Obligations with Legal Recognition
I. While moral obligations are generally insufficient, in limited contexts (e.g.,
family or social arrangements), a later promise to compensate for past actions
may be upheld.
II. Case Reference: Eastwood v. Kenyon (1840)12.

5. PAST CONSIDERATION POSITION IN INDIA

Under the Indian Contract Act, 1872, the concept of past consideration is similar to that under
English law. However, it is governed by specific provisions in the Act, and there are certain
nuances in its application. The general rule under Indian law is that past consideration is no
consideration, i.e., a promise made with reference to an act done before the promise is not
enforceable unless it meets certain exceptions. This is in line with Section 2(d) of the Indian
Contract Act, which defines consideration in the context of a valid contract.

5.1. General Rule: Past Consideration is No Consideration

According to Section 2(d) of the Indian Contract Act, consideration must be given at the time
of the promise or at least be a promise for something in return. The consideration for a

10
Lampleigh v. Brathwait (1615) Hob 105, 80 ER 255.
11
Pao On v. Lau Yiu Long [1980] AC 614.
12
Eastwood v. Kenyon (1840) 11 Ad & E 438, 113 ER 482.

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promise must be either a benefit to the promisor or a detriment to the promisee. The law
explicitly states that past consideration is not valid, meaning that if a promise is made after an
act has been performed (without any prior agreement), it cannot be enforced.

 Section 2(d) of the Indian Contract Act 1872 states that "when, at the desire of the
promisor, the promisee or any other person has done or abstained from doing
something, such act or abstinence is called a consideration for the promise."

Thus, if an act has been performed before the promise was made, it does not constitute
consideration for the promise. This rule is based on the idea that consideration should reflect
a bargain and a quid pro quo, rather than a unilateral promise made after an action has already
been completed.

5.2. Exemptions to past consideration is no consideration

Section 25 of the Indian Contract Act, 1872 outlines several exceptions to the rule that no
consideration means no contract. Below are the key exceptions, with relevant case law and
references to Section 25.
5.2.1. Natural Love and Affection
Section 25 (1) of the Indian Contract Act, 1872 provides those agreements made out of
natural love and affection between parties standing in a near relation to each other, such as
parent and child, spouses, or close relatives, can be enforceable even in the absence of
consideration, provided the agreement is in writing and registered.
Case Law:
 K. S. Venkatraman & Ors. v. A. Seethai Ammal & Ors. (1959):
The Supreme Court of India held that a promise made out of natural love and
affection is valid if it is written and registered, even if there is no consideration. In this
case, the Court enforced an agreement between family members based on natural love
and affection, observing that the absence of consideration does not invalidate such
agreements when they are formally registered.
Citation: K. S. Venkatraman & Ors. v. A. Seethai Ammal & Ors., (1959) 1 SCR 147.
5.2.2. Past Voluntary Services
According to Section 25 (2) of the Indian Contract Act, a promise to pay for a past voluntary
service is enforceable, provided the services were rendered voluntarily, and the recipient of
the services promises compensation at a later time.
Case Law:
 Lampleigh v. Brathwait (1615):
While this is an English case, it is relevant in the Indian context. The Court held that
where services were performed at the request of the other party, even if the promise to

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 pay was made after the service, it was still enforceable. This principle applies to India
as well, where voluntary services may be compensated through a subsequent promise.
Citation: Lampleigh v. Brathwait, (1615) 80 ER 255.
 P. R. R. Laxman v. G. K. V. S. Rao:
In this case, the Supreme Court of India acknowledged the enforceability of a promise
to pay for past services, holding that such services need not be compensated
immediately, but a promise made for payment at a later date remains binding.
Citation: P. R. R. Laxman v. G. K. V. S. Rao, (1992) 1 SCC 335.
5.2.3. Promise to Pay a Time-Barred Debt
A promise made to pay a debt that has become time-barred under the Limitation Act, 1963 is
enforceable, even without consideration, as per Section 25 (3) of the Indian Contract Act.
Case Law:
 Shivnarayan v. N. S. Thakursi (1961):
The Supreme Court of India held that a promise made in writing and signed by the
debtor to pay a time-barred debt is enforceable, as the written promise revives the
liability. This exception reinforces the principle that such promises do not need fresh
consideration to be valid.
Citation: Shivnarayan v. N. S. Thakursi, AIR 1961 SC 218.
5.2.4. Creation of an Agency
Section 185 of the Indian Contract Act, 1872 states that an agency contract can be created
without consideration. The creation of an agency is a valid contract even in the absence of
consideration, as the agency itself does not require any form of consideration to establish a
legal relationship.
Case Law:
 K. K. Verma v. Union of India (1954):
In this case, the Court highlighted that a contract of agency can be formed without
consideration, and the relationship between the agent and the principal remains
binding based on the agreement.
Citation: K. K. Verma v. Union of India, AIR 1954 SC 524.

5.2.5. Gifts

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Under Explanation (1) to Section 25, gifts made by a donor to a recipient are valid even
without consideration. The acceptance of the gift by the recipient creates an enforceable
contract.
Case Law:
 S. K. Gupta v. Dr. M. K. Agarwal (1984):
The Court held that a gift made without consideration is enforceable once it is
accepted by the recipient. The Court observed that the voluntary act of gifting is not
void for lack of consideration, affirming the exception.
Citation: S. K. Gupta v. Dr. M. K. Agarwal, (1984) 2 SCC 226.
5.2.6. Bailment
A contract of bailment (i.e., the delivery of goods for a specific purpose) does not require
consideration under Section 148 of the Indian Contract Act. The relationship between the
bailor and bailee is valid even without consideration.
Case Law:
 Bangalore Turf Club Ltd. v. N. C. Ramaswamy (2001):
The Supreme Court held that a contract of bailment is enforceable without
consideration. In this case, the Court reinforced that the bailment contract, which
involves the temporary possession of goods, does not require fresh consideration.
Citation: Bangalore Turf Club Ltd. v. N. C. Ramaswamy, (2001) 3 SCC 370.
5.2.7. Charity
When a person assumes a liability or responsibility based on a promise made to contribute to
a charitable cause, the contract is enforceable even in the absence of consideration, as a
promise to contribute to charity is generally enforceable under Indian law.
Case Law:
 Indian Red Cross Society v. Government of India (1967):
In this case, the Supreme Court of India held that even in the absence of direct
consideration, a contract involving charitable contributions could be enforced. The
Court highlighted the public policy aspect, where charity-based agreements are
binding upon the parties.
Citation: Indian Red Cross Society v. Government of India, (1967) 2 SCR 766.

CONCLUSION

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The doctrine of "no consideration, no contract" is a fundamental principle of contract law
in India, as enshrined in Section 25 of the Indian Contract Act, 1872. However, this rule is
not absolute, and the Act provides several key exceptions that ensure flexibility and fairness
in legal relationships. These exceptions recognize the practical realities of human
relationships, social obligations, and public policy considerations, allowing for the
enforcement of agreements even in the absence of traditional consideration.

Key exceptions to the no consideration rule include agreements made out of natural love
and affection between near relatives, past voluntary services rendered with the expectation
of future compensation, promises to pay time-barred debts, agency agreements, gifts,
bailment, and contracts based on charitable promises. These exceptions promote justice by
upholding agreements that serve valid social and legal interests, even when they do not meet
the typical consideration requirements.

Through landmark case law such as K. S. Venkatraman v. A. Seethai Ammal, Lampleigh

v. Brathwait, and Shivnarayan v. N. S. Thakursi, Indian courts have consistently applied
and reinforced these exceptions, ensuring that contracts remain enforceable where they serve
meaningful, legitimate purposes.

In conclusion, the Indian Contract Act, while adhering to the core principle that consideration
is necessary for a binding contract, acknowledges that certain exceptions are necessary to
reflect real-world complexities. These exceptions strike a balance between legal certainty and
the recognition of social and familial relationships, encouraging fair and equitable agreements
in both personal and commercial contexts. The flexibility embedded within Section 25
ensures that justice is not undermined by rigid application of the "no consideration, no
contract" rule, making Indian contract law more adaptable and just in its application.

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