Q2- No consideration, No contract. Explain.
According to Section 10 consideration is one of the essential elements of a contract. According to Section 25, an agreement made without consideration is void.
EXCEPTION TO THE GENERAL RULE NO CONSIDERATION, NO CONTRACT
The following are the exception to the general rule No Consideration, No contract.
a- AGREEMENT MADE ON ACCOUNT OF NATUAL LOVE AND AFFECTION:
Such agreement made without consideration is valid if,
- It is expressed in writing.
- It is registered under the law.
- It is made account of love and affection.
- It is between parties standing in a near relation to each other.
A husband by a registered document promised to pay his wife Rs 1000 per month as per pocket money. This agreement is valid.
b- PROMISE TO COMPENSATE
Such promise made without consideration is valid if:
- It is a promise to compensate (wholly or on part).
- The person who is to be compensated has already done something volume tarily or has done something which the promsior was legally bound to do.
X finds Y’s purse and gives it to him. Y promises to give Rs 500 to X. This is a valid contract even though the consideration did not move at the desire of Y, the promisor.
c- PROMISE TO PAY TIME BARRED DEBT
Such promise without consideration is valid if:
- It is made writing
- It is signed by the debtor or his agent
- It related to a debt, which could not be enforceable by a creditor because of limitation.
d- COMPLETED GIFTS OR TO GHIVE SOMEONE AS GIFT
The gifts actually made by a donor and accepted by the donee are valid even without consideration. Thus, a completed gift needs no consideration.
- Possession of gift must be delivered.
- For this purpose there is no need of natural love or near relation between donor and donee.
- Gift does not need consideration for its validity.