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Types Of Consideration

Consideration under Indian contract act 1872
Definition: In common parlance, consideration refers to something paid to a person in get back for something else. In felony terminology, it could be understood as the fee or compensation which must be paid by using the promises to the promisor for doing or now not doing an act. consideration is important for a valid contract, in the absence of which a promise cannot be enforceable. it is able to inhere some advantage, proper or interest, to be obtained by means of the promisor, or loss, detriment, or obligation inflicting to the promise's consideration therefore, consideration can be a promise or overall performance of an act which the events to the agreement change with each other. it is the base of a settlement.

Regulations for consideration
There are several policies regarding the consideration, discussed as under:
Must flow at promisor's desire:
consideration have to be provided by way of the promises or another party, as in line with the desire or request of the promisor. meaning that the responsibility completed need to be according to the promisor's choice and no longer of promise's personal free will or now not as according to the choice of the third person.

Additionally proceed from promise or any other birthday celebration:
The consideration may pass out from the promise or some other birthday party. here the phrase another person approach stranger, who is not a party to the settlement. while the promise or some other birthday celebration plays an act, as per the preference of the promisor, such an act is appeared as consideration.

Executed and Executory:
When one birthday celebration to a agreement has carried out his/her part, the consideration is said to be performed for that birthday party, while the other has just promised to carry out it, the consideration is said to be executory for that party.

No longer necessarily be adequate:
Consideration isn't necessarily of a selected price, i.e., it need now not be equal to the price of the promise. this is because of the fact that something in alternate isn't necessarily of identical price to something furnished or promised. consequently, what matters is, consideration should be something of price, as in keeping with law, which the events are free to decide even as moving into the agreement.

Need to know not be the performance of felony responsibility:
It must not be an act which someone is sure to perform, as in keeping with regulation. Such contracts are seemed as void contracts. however, if someone guarantees to do something which is over and above of what he/she is legally bound to do, supplied it does not violate any rule or public coverage, then it'll represent consideration.

Have to be actual:
It needs to be real, positive and something of cost. It must not be illusory, vague and legally or physically not possible.

Have to be lawful:
It must be lawful and moral and it have to no longer violate any public policy, otherwise, it's going to no longer be appeared as a legitimate consideration.
therefore, consideration want now not be monetary, as an alternative a forbearance to sue, promise for any other promise, settlement of the dispute, refraining from something, detriment also can quantity to consideration.

Agreements no longer requiring consideration
consideration is the essence of the contract, without which there may be no settlement in any respect. but there are positive agreements that are deemed legitimate and enforceable even without consideration. those are:
  • Written settlement based on natural love and affection amidst the parties, who're in close relation with each other
  • Promise to pay someone completely or in part, for the act completed voluntarily, in the past
  • Written promise via the promisor himself or his authorized agent to pay a time-barred debt.
  • contract of agency
  • completed gifts
  • agreement of Bailment
  • Charity

Types of consideration

There are in particular three varieties of consideration: sorts of consideration
Executory or future consideration: Executory consideration, because the name indicates is one which is but to be performed. which means the promise or obligation might be accomplished in future.

Accomplished or gift consideration: achieved consideration, manner the only which is simultaneously supplied whilst the promise is made. that means that the act which amounts to consideration is fully accomplished.

Past consideration: past consideration refers back to the formerly accomplished act or forbearance which amounts to consideration has already been provided before the promise is given. similarly, if consideration for a gift promise is supplied earlier to the date of promise, it's far seemed as past consideration.

Note: As per English law, there are most effective two sorts of consideration, i.e., achieved and executory, whilst the beyond consideration isn't always appeared as consideration, however Indian law deems all of the 3 types.

Written by-Dinesh Kumar Mishra, BA.LLB (8th Semester) - Kalinga university, Raipur

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