new final law

8/7/2019 new final law

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MEANING OF CONSIDERATION:

A valuable consideration in the sense of the law, mayconsist either in some right , interest, profit or benefitaccruing to the one party or some forbearance ,detriment, loss or responsibility given, suffered or undertaken by the order.

Ruchita


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MEANING OF CONSIDERATION:

When a party to an agreement promises to do something,he must get something in return. This something isdefined as Consideration.

Consideration is the price for which the promise of theother is brought, & the promise thus given for value isenforceable.

Ruchita


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ESSENTIAL ELEMENTS OF VALIDCONSIDERATION

1. Consideration must move at the desire of thePromisor :

An act constituting consideration must have been doneat the desire or request of the promisor.

Thus, an act done at the desire of a third party or without the desire of the promisor cannot constitute avalid consideration.

Ameya


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2 . Consideration may move from the promisee orany other person:

An act constituting consideration may be done bypromisee himself or any other person ( i.e. stranger toconsideration). Thus, it is immaterial who furnishes

the consideration & therefore, may move from thepromise or any other person.

Ameya


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Present consideration : The Consideration which movessimultaneously with the promise, iscalled present consideration.

E.g.: In case of cash sale, promise topay the price & promise to deliver thegoods are performed simultaneously.

Future consideration : The consideration which is to be movedafter the formation of agreement iscalled future consideration.

E.g. : X promises to deliver certaingoods to Y after 10 days & Y promisesto pay after 10 days from the date of delivery.


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4 . Consideration must be of some value:

The consideration need not be adequate to thepromise but it must be of some value in the eye of thelaw.

It is understood in the sense of something in return &that something in return and that something can beanything, adequate or grossly inadequate.

Ameya


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5 . It must be Real and NOT Illusory:

The consideration must be real & not illusory.

Sherya


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7 . Lawful :

The consideration must neither be unlawful nor opposed to public policy.

Sherya


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A STRANG ER TO A CONTRACT CANNOT SUE, BUT ASTRANG ER TO CONSIDERATION CAN SUE.

Though a stranger to consideration can sue because theconsideration can be furnished or supplied by any personwhether he is the promisee or not, but a stranger tocontract cannot sue because of the absence of privities of contract.

Sherya


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EXCEPTIONS

1. In case of Trusts :

The beneficiary ( i.e. the person for whosebenefit the trust has been created) mayenforce the contract.

Naveen


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EXCEPTIONS

2 . In case of Family Settlement :

The person for whose benefit the provision is madeunder family arrangements may enforce the contract.

Naveen


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EXCEPTIONS

3 . Acknowledgement :

The person who becomes an agent of third party byacknowledgement or otherwise, can be sued by suchthird party.

Naveen


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EXCEPTIONS

4 . Assignment of a Contract :

Where a benefit under a contract has been assigned,assignee can enforce the contract subject to all equitiesbetween the original parties to the contract.

Naveen


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G ENERAL RULE :

According to Section 10, consideration is one of theessential elements of contract.

According to Section 25, an agreement made withoutconsideration is void.


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EXCEPTIONS TO THE G ENERAL RULE :NO CONSIDERATION, NO CONTRACT.

1. Agreement Made on Account of Natural Love andAffection [ section 25 (1)] :

Such agreement made without consideration is valid if :a) It is expressed in writing,b) It is registered under law,

c) It is made on account of love & affection, &d) It is between parties standing in a near relation to each

other.


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2 . Promise to Compensate [ section 25 (2 )]:

Such promise made without consideration is valid if:a) It is a promise to compensate (wholly or in part),b) The person who is to be compensated has already done

something voluntarily or has done something which the

promisor was legally bound to do.


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3 . Promise to Pay Time Barred Debt [ section 25 (3 )]:

Such promise without consideration is valid if :a) It is made in writing,b) It is signed by the debtor or his agent,c) It is related to a debt which could not be enforced by a

creditor because of limitation.


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4 . Completed Gifts [Explanation to Section 25 ]:

The gifts actually made by a donor & accepted by thedonee are valid even without consideration. Thus, acompleted gift needs no consideration.


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5 . Agency [Section 18 5 ] :

No consideration is necessary to create an agency.

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