For Commercial Law Students

1. Consideration and Object

2. Introduction
• The price
• For the promise or
• The something given and
• Obtained is called consideration
• Consideration is something in return.
• Something which is of some value in the
eyes of law. (Valuable Consideration)

3. • Agreement is a mutual Exchange of
Promises.
• One party makes the promise (For Doing
or Not doing any thing)
• Another party also makes similar Promise.

4. • Every Promisor gets something in return
of his promise from another party.
• It may be a Right , interest , profit or
benefit , responsibility.
• Whatever he gets will constitute
consideration for his Promise.

5. Example
• A offers to sell his car to B for 5 Lacs.
• B Accepts the offer.
• There is the mutual Exchange of Promises
(Obligation/Undertaking) between them.

6. • A is a Promisor for “ Handing over
possession and ownership of that car to B.
• A in return of his promise gets right to
recover Rs.5 lacs from B which Constitute
consideration for his Promise. Vice versa

7. It may be as Follows:
• An act
• Abstinence
• Promise
Forms of Consideration

8. ACT: Doing of Something
Example:
• A agrees to constructs B’s House for Rs:
1 Million.
• B’s Promise to Pay Rs: 1 Million is the
consideration
for A’s promise of
Constructing the House. (Act)

9. ABSTINENCE: Refraining from
doing Some Act
• Forbearance to Exercise the legal Right,
e.g.
Example:
• A promise not to sue B if B pays him
Additional Rs. 5,000.
• The Abstinence of A is the Consideration
for B’s Payment.

10. Example
• In return of Rs. 2 Million from a Sports
Goods company a super star of cricket
makes a promise not to use bats other
than manufactured by that company.
• In this case Consideration for the other
companies is in the from of Abstinence.
• A super star has promised to abstain from
using other bats.

11. PROMISE: From Both Sides
• (A Promise by one party against the
promise of other party.
Example:
• A agree to sell his Car to B for Rs. 1
Million.
• B’s Promise to pay Rs. 1 Million is the
Consideration for A’s Promise.
• A’s Promise to sell the Car is the
Consideration for B’s Promise.

12. • Any Act , Abstinences or Promise may
Result in Benefit , right or interest for one
party and/or
• Loss and obligation for another party.

13. Essentials of a Valid Consideration
• It must move at the desire of the Promisor.
• For valid Consideration it must be move
on the desire/ Request of the Promsior.
• Not done voluntarily or without the request
of the promisor.

14. It may be
• Past
• Present
• Future

15. It must be real
• Not valid if
– Physically Impossible
– Legally Impossible
– Uncertain Consideration
– Unreal consideration

16. Exception
• Natural Love and Affection
– In Writing , registered , Relationship , natural
love and affection.
• Voluntary Compensation
– To compensate
• Time Barred Debt
– Not claimed for a period of 3 years from the
date it becomes Due. Limitation Act 1908.

17. • Completed Gift
– Possession is given.
• Contract of Agency
– Without charging any commission.
• Remission by the Promisee
– Less then what is due
– Extended time for performance of a contract

18. UNLAWFUL CONSIDERATION AND
OBJECTS.
• The object means the purpose of the
contract/agreement.
• 1.IF IT IS FORBIDDEN BY THE LAW
Punishable by law
Example: Goods obtained by the theft
Prohibited by law
Example: Sale without license

19. 2.IF IT DEFEATS THE PROVISION
OF LAW.
• Indirectly violate law
• If permitted, it would defeat the
provisions of any law.
Example: A fails to pay his loan to HBFC.
A’s house is sold for Recovery of Debt. A
is prohibited from purchasing his house.

20. 3. IF IT IS FRAUDULENT.

21. 4.IF IT INVLOVES INJURY TO PERSON
OR PROPERTY OF ANOTHER.
• To cause an injury to the person and or
property of another is illegal and also
void.
Example: Put certain property on fire.
To beat a man.

22. 5.IF THE COURT REGARDS IT AS
IMMORAL
• Immoral means acts which are against
the moral values also prohibited by the
law.
Example: Marriage-Divorce.

23. 6.IF THE COURT REGARDS IT AS
OPPOSED TO PUBLIC POLICY.
• Harmful to the society or the state.
Example: Give money to give false
evidence.
Agreement with an alien
enemy.