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BusinessLaw|
6/8/2011
Business Law
Consideration and Object
Sec 2(d) defines, when at the desire of promisor, the promisee
or any other person
has done or abstained from doing such act or abstinence or
promise is called a
consideration for the promisee.
Essentials of a valid consideration
1.It must move at the desire of the promisorFor a valid
consideration, the act or abstinence which forms the
consideration
must be done at the desire of the promisor. It means that any
act performed at
the desire of the third party or without the desire of the
promisor cannot be aconsideration. Similarly, the act done
voluntarily will not create a valid
consideration.
ExampleA saved Bs house from fire. B did not ask for help. A
cannot demand payment
for his service because he acted voluntarily.
2.It may move from the promisee or any other personA
consideration may move from the promisee or any other person. It
means a
person can sue on a contract: even if the consideration for the
promise moved
from the third party.ExampleA gifted property to her daughter R
on the condition that she would pay certain
amount annually to As brother C. R promised to pay the amount to
her uncle C. later
R refused to pay. C sued. Held C could recover the amount as the
consideration had
moved from A to C. (Chinnaya vs. Ramayya)
3.It may be an act or abstinence or promisea)Act
A consideration may be an act i.e. doing of something. In this
sense
consideration is in positive form.Example
P agrees to construct As house for Rs. 10 Lac. As promise to
payRs. 10 Lac is the consideration for Ps promise of
constructinghouse.
b)AbstinenceAbstinence means refraining from doing something. In
this sense
consideration is in negative form.
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ExampleA promise not to sue B if B pays him additional Rs. 5000
the abstinence
of A is the consideration for Bs payment.
c)PromiseFor a valid consideration there must be a promise from
both sides. It means
that there must be a promise by one party against the promise of
the other
party.
ExampleA agrees to sell his horse to B for Rs. 30000. Bs promise
to pay Rs.
30000 is the consideration for As promise. As promise to sell
his horse is the
consideration for Bs promise.
