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When would be a Contract Valid Even Without Consideration?
Consideration signifies the purpose of the making of a contract; hence, its existence is necessary for its completion, and therefore, a contract without consideration is considered void under the law, which means that the contract never came into existence. The rule with respect to consideration is absolute in English law; however, there are certain limited exceptions to it under Indian law due to the special cultural and social customs of the communities.
Although the limited nature and enforcement of these exceptions always protect the inherent purpose of a contract while balancing different interests,
What is the meaning of a Contract which is valid even without Consideration?
Section 25 of the Indian Contract Act, 1872, provides in explicit terms that a contract would be void without consideration. The law is stringent with respect to consideration because it is essential in determining the intention and rights of parties to an agreement, as no one performs any duty unless it is obligatory except in certain exceptional circumstances, especially in Indian circumstances.
When does a contract become valid without consideration?
The Indian Contract Act, 1872, provides three specified exceptions to the general rule under which a contract without consideration is valid and legally enforceable due to acceptable reasons.
The three prescribed circumstances, as mentioned in Section 25, are as follows −
Natural Love and Affection − Sub-section (1) provides that a contract made without consideration on account of natural love and affection would be valid if the following requirements were satisfied, which include −
The contract is made in writing.
It is duly registered under the law.
It is made solely on account of the natural love and affection between the parties.
The parties must stand in close proximity to each other.
Compensation for Past Voluntary Services − Sub-section (2) provides that a contract can be made without any consideration from the promisee by the promisor for compensating the promisee, either partly or completely, for his past voluntary services to the promisor. Although it is essential that the services have been rendered to the promisor and nobody else.
Payment of Time-barred Debt − Sub-section (3) provides that a promise or agreement can be made for a person to pay a time-barred debt, either wholly or in part, if the below-mentioned factors are fulfilled −
The promise must be made in writing.
It must be signed by the person who is to make the payment or by his duly authorised agent.
Thus, the above-stated three conditions are exceptions to the general rule of consideration in contracts. Although these three circumstances are expressly provided by the law, strict compliance is a pre-requisite, and any deviation from any of the required conditions would directly affect the legal validity of the promise.
Conclusion
Consideration is the sole purpose of making a contract; therefore, it has a crucial place in its creation and performance. However, in certain exceptional circumstances, as provided by the Act, the basic constituting factor of the contract is given away, keeping in mind the special circumstances of India, wherein a duty is considered more pious and obligatory in comparison to privileges and profits. Further, despite the special circumstances, the conditions are made mandatory in nature in order to maintain due order in society.
Frequently Asked Questions
Whether non-fulfilment of any of the pre-requisites as specified in Section 25 makes the promise legally unenforceable?
The conditions provided in Section 25 are of an essential and mandatory nature; therefore, non-fulfilment of even one condition would make the promise legally unenforceable.
Whether the amount of debt needs to be specified in the promise?
It is essential that the amount that the person in charge of the promise is required to pay be mentioned expressly; however, if the reference to the debt is made explicitly, then that would also suffice for the requirement of Section 25.
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