Indian Contract Act 1872: Consideration Concepts
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Questions and Answers

What happens to an agreement without consideration, according to the Indian Contract Act, 1872?

  • It is void. (correct)
  • It may be enforceable.
  • It requires additional approval.
  • It is valid.

What best describes the principle of consideration in a contract?

  • A promise made without any expectation of return.
  • A benefit only one party receives.
  • An obligation that one party must fulfill only.
  • A reciprocal arrangement between parties. (correct)

How does Pollock define consideration?

  • The 'price' for which a promise is bought. (correct)
  • An act that benefits only the defendant.
  • The emotional value of a promise.
  • A formal document to finalize a contract.

According to Justice Patterson, what constitutes consideration?

<p>Something of value in the eyes of the law. (C)</p> Signup and view all the answers

What is the commonly accepted definition of consideration?

<p>As explained in <em>Currie vs. Misa</em> (1875). (B)</p> Signup and view all the answers

What makes consideration unenforceable due to physical impossibility?

<p>The performance of the consideration is not possible. (D)</p> Signup and view all the answers

Which of the following is an example of unlawful consideration?

<p>Promising to secure a government job in exchange for money. (B)</p> Signup and view all the answers

Why doesn't inadequate consideration invalidate an agreement?

<p>Because the law assumes consideration exists. (A)</p> Signup and view all the answers

What is an example of uncertain consideration?

<p>Offering 'a handsome salary' without a specified amount. (C)</p> Signup and view all the answers

Which condition renders consideration unlawful under Section 23 of the Indian Contract Act, 1872?

<p>It is fraudulent or involves harming a person's property. (C)</p> Signup and view all the answers

What is the primary characteristic of consideration in a contract?

<p>It consists of something of value exchanged between parties. (C)</p> Signup and view all the answers

Which of the following best describes a scenario involving valid consideration?

<p>One party agrees to pay $100 for services rendered by another party. (B)</p> Signup and view all the answers

According to the definition of consideration, which of the following is NOT considered valid consideration?

<p>Doing a favor without any discussion of exchange. (D)</p> Signup and view all the answers

Which of the following is a requirement for consideration to be deemed valid?

<p>It must come at the desire of the promisor. (A)</p> Signup and view all the answers

What does the term 'quid pro quo' refer to in the context of consideration?

<p>A mutual exchange of benefits. (B)</p> Signup and view all the answers

What constitutes valid consideration in a contract?

<p>Forbearance to sue a party for a legitimate claim (A)</p> Signup and view all the answers

Why is the promise to pay a police officer for duties already performed considered void?

<p>The performance of a legal duty is not seen as valid consideration. (B)</p> Signup and view all the answers

What is true about the doctrine of privity of contract?

<p>Only the parties involved in the contract have legal rights under it. (B)</p> Signup and view all the answers

In which scenario is consideration deemed invalid?

<p>A promise to pay an advocate extra for contractually defined services (A)</p> Signup and view all the answers

What is a key limitation of forbearance to sue as a valid consideration?

<p>The claim must be legitimate and based on actual circumstances. (D)</p> Signup and view all the answers

What does privity of consideration state?

<p>The person who furnished the consideration has the legal right to enforce the contract. (A)</p> Signup and view all the answers

In the case of Dutton vs. Poole, why was the son required to pay the marriage expenses?

<p>There was consideration from his father in the form of a promise not to fell timber. (B)</p> Signup and view all the answers

What defines a 'stranger to consideration' in a contract?

<p>A person who is not a party to the consideration but may benefit from it. (B)</p> Signup and view all the answers

What was the central outcome of the Chinnaya vs. Ramaya case?

<p>The plaintiffs could enforce the promise due to consideration from the mother. (D)</p> Signup and view all the answers

Who has the right to sue under a contract when consideration is provided by someone else?

<p>The beneficiaries of the contract. (B)</p> Signup and view all the answers

What is established once a contract is formed?

<p>Privity of contract is established (D)</p> Signup and view all the answers

Which of the following statements about privity of contract is true?

<p>Only parties to the contract can sue each other. (A)</p> Signup and view all the answers

In the case of Dunlop vs. Selfridge, why did Dunlop & Co. fail to sue Selfridge & Co.?

<p>They were not in a contractual relationship. (D)</p> Signup and view all the answers

What does the doctrine of privity emphasize regarding contracts?

<p>Contracts are only enforceable by parties involved. (D)</p> Signup and view all the answers

What was the outcome in the case of Jamna Das vs. Ram Avtar?

<p>No privity of contract was established between B and R. (A)</p> Signup and view all the answers

What types of consideration are recognized under the Indian Contract Act?

<p>Past, present, or future consideration (A)</p> Signup and view all the answers

Which statement is true about the movement of consideration?

<p>Consideration must move at the desire of the promisor (D)</p> Signup and view all the answers

What is the implication of past consideration in contract validity?

<p>Past consideration can be valid if made at the promisor's desire (A)</p> Signup and view all the answers

How is the adequacy of consideration judged in contracts?

<p>By the parties at the time of agreement (C)</p> Signup and view all the answers

What can be a reason for courts to examine inadequacy of consideration?

<p>To determine if free consent was given (B)</p> Signup and view all the answers

Which of the following scenarios illustrates present consideration?

<p>A student paying monthly while attending classes (C)</p> Signup and view all the answers

What is true regarding the validity of a contract with inadequate consideration?

<p>It can be valid if consent was freely given (B)</p> Signup and view all the answers

In which scenario is future consideration illustrated?

<p>A student who promises to pay after completing the course (D)</p> Signup and view all the answers

What must be true for an act to constitute valid consideration in a contract?

<p>The act must be done at the desire of the other party. (B)</p> Signup and view all the answers

In the case of Durga Prasad v. Baldeo, why was the shop owner F not liable to pay commission to A?

<p>The construction was at the request of a third party. (A)</p> Signup and view all the answers

What determines the liability of a promisor in a contract?

<p>If another party incurs liability relying on the promise. (B)</p> Signup and view all the answers

According to Section 2(d), what is important for a valid contract regarding consideration?

<p>The existence of consideration itself. (C)</p> Signup and view all the answers

If the temple authorities enter into an unrelated contract after relying on Joy's promise, what is the outcome?

<p>Joy is not liable for the ₹1 lac. (A)</p> Signup and view all the answers

Flashcards

Consideration

Something of value exchanged between parties in a contract. It can be a benefit, a detriment, or a promise to act or forbear from acting.

Desire of the Promisor

The consideration must be provided at the request of the promisor, not by a third party or voluntarily.

Benefit or Detriment

A benefit received by the promisor or a detriment suffered by the promisee. This exchange is essential for a valid contract.

Exchange of Promises

The exchange of promises between parties forms the basis of the contract. Each promise serves as consideration for the other.

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Legal Value

Consideration can be anything that has legal value. This includes acts, forbearances, rights, and even the promise to do something.

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Contract without consideration

An unenforceable agreement because one party doesn't offer anything in return for the other's promise.

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What qualifies as consideration?

Something of value in the eyes of the law. It can be a benefit to the promisor or a detriment to the promisee.

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Consideration according to Pollock

The 'price' for which a promise is purchased, making it legally binding. It must be a reasonable equivalent or another valuable benefit.

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Consideration according to Justice Patterson

Something of value given by one party to the other. It must be recognized as valuable by the law.

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What is Consideration?

Something of value, recognized by law, exchanged by parties in a contract. It doesn't need to be fair, but must be real and not illusory.

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What makes consideration "not real"?

A promise that can't be fulfilled, even if it's legal. It's like promising to fly to the moon without a spaceship - just not possible.

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What makes consideration "unlawful"?

A consideration is illegal if it breaks the law, harms someone, or goes against public order. Like paying for a government job, it's not allowed.

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What makes consideration "uncertain"?

A promise in a contract that's too vague, like promising a "handsome salary" without a specific amount, is unenforceable.

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What makes consideration "lawful"?

A consideration is lawful if it's legal, doesn't hurt anyone, and aligns with public policy. It ensures a fair and ethical exchange.

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Performance of Legal Duty as Consideration

A promise to do something that is already legally required of the promisor is not considered valid consideration for a contract. This means someone cannot demand payment for fulfilling an existing legal obligation.

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Forbearance to Sue

Forbearance to sue, where one party agrees to refrain from taking legal action against another in exchange for something, is considered valid consideration. The claim involved must be legitimate.

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Privity of Contract

The principle that only parties directly involved in a contract can enforce its terms. This means a third party who isn't a part of the contract cannot sue to enforce it.

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Doctrine of Privity of Contract

The legal relationship between the parties who create a contract.

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Stranger to Contract

A person not a party to a contract cannot gain rights under that contract, meaning they cannot sue for its enforcement.

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Privity of Consideration

The person who provided consideration in a contract has the right to enforce it, regardless of whether they directly benefit from the contract.

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Stranger to Consideration

A person who is not a party to the contract, but still benefits from its terms, can sue to enforce the contract if they provided consideration indirectly.

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Consideration Moving from a Third Party

In cases where a promise is made in return for a promise, even if the promise is not made directly to the beneficiary, the beneficiary can still sue for breach.

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Consideration need not move from the promisee

The person who provided consideration doesn't have to be the one who directly benefits from the contract, it can be someone else.

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What makes a contract enforceable?

A contractual promise becomes legally binding and enforceable when something of value is exchanged between parties.

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Consideration at Whose Request?

An act performed by one party as consideration for another must be done at the request of the other party. An act done at the desire of a third party is not valid consideration.

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Liability based on Reliance

If a party relies on a promise and incurs liability, the promisor is liable for the promise. If the reliance leads to a related contract, the promisor is still liable.

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Source of Consideration

The source of consideration is immaterial. It can come from the promisee or a third party. What matters is the other party receiving consideration.

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Case: Durga Prasad v. Baldeo

In the case of Durga Prasad v. Baldeo, the court held that a shop owner was not liable for commission paid to the market builder because the construction was at the collector's request, not the shop owner's.

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Consideration in Durga Prasad v. Baldeo

In Durga Prasad v. Baldeo, the construction of the market was not at the shop owner's desire, so the shop owner was not liable for commission.

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Privity Established

A legal relationship that arises when two parties agree to terms, creating a contract.

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Tweddle v. Atkinson

A legal case illustrating the doctrine of privity of contract, where a party could not sue on a contract that was designed to benefit them.

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Dunlop Pneumatic Tyre Co. vs. Selfridge & Co.

A case illustrating the application of privity of contract, where one party could not sue another that had indirectly benefited from their contract.

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When can consideration occur?

It can be performed in the past, present, or future.

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Who should the consideration benefit?

The consideration must be provided at the promisor's desire.

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Can consideration be received after the promise?

Consideration must occur at the same time or before the promise. It can't be received after the promise is made.

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What is adequacy of consideration?

It's the value of the consideration, which can be uneven.

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Is equal value required in consideration?

The law doesn't require equal value, but the agreement needs to be freely consented. The court can look at the adequacy to understand consent.

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Can the court decide on the fairness of the consideration?

The courts don't judge the 'fairness' of the deal, only if both parties freely agreed to it.

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What happens if consideration is unequal?

Even if it doesn't match the value received, if freely consented, the consideration is valid.

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Study Notes

Consideration

  • Consideration is an essential element of a valid contract
  • An agreement without consideration is a void agreement
  • Consideration is the price for which the promise of the other is bought
  • Consideration is the recompense given by the party contracting to the other
  • Consideration can be anything; some interest, profit, right, even forbearance to sue
  • Consideration must exist to make an agreement a valid contract
  • Consideration is what one party does for the other party, and in return what the other party does for the first party
  • Consideration is a benefit for both parties
  • Consideration is an exchange of promises
  • Consideration is the price paid for buying the promise of the other party
  • Consideration must move at the desire of the promisor

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Test your knowledge on the principles of consideration as outlined in the Indian Contract Act of 1872. This quiz covers definitions, characteristics, and examples related to valid and unlawful consideration in contracts. Prepare to deepen your understanding of this essential aspect of contract law.

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