Contract Law · Consideration and Capacity

Consideration: Definition, Kinds and Essentials

Learn what consideration means under Section 2(d), how past, present and future consideration work, and when a promise without consideration can still be enforced.

7 min readReviewed by Advocate Aditya Sharma
Section 2(d)Section 25

In one line

Consideration is the legally recognized price of a promise, given at the desire of the promisor.

After this note, you should be able to

  • Apply the statutory definition of consideration to a problem.
  • Distinguish past, present and future consideration.
  • Recall the main exceptions to the rule that an agreement without consideration is void.

The Section 2(d) rule

An act, abstinence or promise is consideration when it is done at the desire of the promisor in return for the promise.

At the promisor's desire
A voluntary act or an act done only at a third person's request is not consideration for the promisor's later promise.
May move from another person
Indian law permits consideration to move from the promisee or any other person, though only a party to the contract can ordinarily sue.
Must be real and lawful
It need not be financially adequate, but it cannot be illusory, impossible or unlawful.
Need not be adequate
Courts generally do not measure whether the bargain was equal, but gross inadequacy may help show that consent was not free.

Kinds and Section 25 exceptions

The wording of Section 2(d) recognizes three times at which consideration may operate.

Past
The act has already been done at the promisor's desire before the promise is made.
Present or executed
The act is performed in exchange for the promise, as in a reward offer accepted by performance.
Future or executory
Each side promises a later performance.
Main exceptions
Section 25 saves certain written and registered promises based on natural love and affection, promises to compensate for a past voluntary act, and signed promises to pay a time-barred debt.

Work through the facts

Illustration

Facts

A asks B to repair a damaged boundary wall and promises to pay Rs 20,000. B completes the work. A then refuses to pay.

Likely result

B's work was done at A's desire and is valid consideration. A's promise can be enforced if the other requirements of contract are present.

What to learn

Always connect the act to the promisor's request. Merely showing that the promisor received a benefit is not enough.

Cases with a purpose

Landmark judgments

Learn the rule and where to use it. A case name without its legal function adds very little to an answer.

Kedarnath Bhattacharji v. Gorie Mahomed

Core case

(1886) ILR 14 Cal 64

Principle: A subscription became enforceable when liability was incurred on the faith of the promise.

Use in an answer: Use it where the promisee changed position or incurred obligations because of a promised contribution.

Chinnaya v. Ramayya

Further reading

(1882) ILR 4 Mad 137

Principle: Consideration may move from a person other than the promisee under the Indian statutory definition.

Use in an answer: Use it to distinguish consideration moving from a third person from the separate rule of privity of contract.

For a 10-mark answer

Answer structure

  1. Quote the substance of Section 2(d).
  2. Identify the act, abstinence or promise and connect it to the promisor's desire.
  3. Classify the consideration by time.
  4. Test reality, lawfulness and any Section 25 exception.
  5. Apply one relevant case and conclude.

Common mistakes

  • Writing that consideration must always move from the promisee.
  • Confusing inadequacy with absence of consideration.
  • Calling every earlier act valid past consideration.

Before you close the tab

Quick revision

  • Consideration may be an act, abstinence or promise.
  • It must be at the promisor's desire.
  • It may move from the promisee or any other person.
  • No consideration generally means no contract, subject to Section 25.

Test yourself

  1. Can consideration move from a stranger under Indian law?
  2. When does an earlier act count as past consideration?
  3. What are the three principal Section 25 exceptions?

Short answers

Frequently asked questions

Must consideration be equal in value to the promise?

No. It must be real and lawful, but it need not be adequate. Inadequacy can still be relevant when the court examines free consent.

Is a promise without consideration always void?

Usually, but Section 25 contains specific exceptions and other statutory rules may also apply.

Primary sources

This is an educational study note. Always read the bare provision and the full judgment before relying on a proposition in research or practice.