Best CSEET Online Classes

Best CSEET Online Classes for Nov 2021

Best CSEET Online Classes for Nov 2021 - Law related to Contract - Class 5

Best CSEET Online Classes for Nov 2021 – Law related to Contract – Class 5

Topics covered in this Class

Consideration

  • Essential element of a contract
  • A promise without consideration cannot be enforceable at law (except in certain cases)
  • Consideration means “quid pro quo”, i.e. “something in return”

According to Section 2(d),
When at the desire of the promisor,

  • the promisee or any other person
    • has done or abstained from doing something, or
    • does or abstains from doing something, or
    • promises to do or to abstain from doing something,

such act or abstinence or promise is called a consideration for the promise.

Essentials of Consideration

  1. Consideration must be at the desire of the promisor
    Voluntary/ gratuitous act or abstinence by one person shall not bound other person.
  2. In Indian Laws, consideration may move from the promisee or from any other person
    It means a stranger to the consideration can sue on the contract.
    It should be noted that In English law, consideration must move from the promisee, so that a stranger to the consideration cannot sue on the contract.

Kinds of Consideration

  • Executory or Future Consideration
  • Executed or Present consideration
  • Past Consideration

In English law, past consideration is no consideration.

Rules Governing Consideration

  1. Every contract shall be supported by some consideration (except in certain cases)
  2. A gratuitous promise (promise without consideration like in case of charity, donation or gift) is not enforceable.
  3. Consideration may be an act of promise (to do something) or abstinence (not to do something)
  4. Consideration must be real, definite and not vague, or illusory
  5. Consideration need not to adequate
  6. Consideration must be lawful
  7. Consideration must be something more than the promisee is already bound to do for the promisor 

When Consideration not Necessary

  1. If it is expressed in writing and registered and is made out of natural love and affection between parties standing in a near relation to each other; or
  2. If it is made to compensate a person who has already done something voluntarily for the promisor, or done something which the promisor was legally compellable to do; or
  3. If it is a promise in writing and signed by the person to be charged therewith, or by his agent, to pay a debt barred by the law of limitation.
  4. Besides, according to Section 185 of the Indian Contract Act, consideration is not required to create an agency.
  5. In the case of gift actually made, no consideration is necessary. There need not be nearness of relation and even if it is, there need not be any natural love and affection between them.

Whether Gratuitous Promise can be enforced

  • When promisee has taken some action and/or create some liability due to the promise of promisor.
  • Gratuitous Promise can be enforced only for that amount which promisee incurred due to the promise of promisor.

Doctrine of Privity of Contract
A stranger to a contract cannot sue. It means a person who is not a party to a contract is stranger to contract and cannot sue upon it even though the contract is for his benefit.

Exceptions

  1. A beneficiary under an agreement to create a trust can sue upon the agreement, though not a party to it, for the enforcement of the trust so as to get the trust executed for his benefit.
  2. An assignee under an assignment made by the parties, or by the operation of law (e.g. in case of death or insolvency), can sue upon the contract for the enforcement of his rights, tittle and interest. But a mere nominee (i.e., the person for whose benefit another has insured his own life) cannot sue on the policy because the nominee is not an assignee.
  3. In cases of family arrangements or settlements between male members of a Hindu family which provide for the maintenance or expenses for marriages of female members, the latter though not parties to the contract, can sue.
  4. In case of acknowledgement of liability.
  5. Whenever the promisor is by his own conduct estopped from denying his liability to perform the promise, the person who is not a party to the contract can sue upon it to make the promisor liable.
  6. In cases where a person makes a promise to an individual for the benefit of third party and creates a charge on certain immovable property for the purpose, the third party can enforce the promise though, he is stranger to the contract.

You are studying this topic at Best CSEET Online Classes for Nov 2021 – Law related to Contract – Class 5

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