Page 29 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes
Consideration means something in return. It is the price for which the promise of the other
is bought. It may be in the form of benefit, right, interest or profit that may accrue to one
party, or it may be some forbearance, detriment, loss or responsibility suffered by the other.

Section 25 of the Contract Act makes it clear that an agreement without consideration is
invalid. However, the same section provides certain exceptions to the rule ‘no consideration,
no contract’. An agreement without consideration is valid under following circumstances:
It is expressed in writing and duly registered and made on account of natural love
and affection between parties standing in near relations to each other;

It is a promise to compensate a person who has already done something, which the
promisor is legally compellable to do;

It is a promise in writing signed by the debtor or his agent to pay a time-barred debt;
It is a completed gift;
It is a contract of bailment or contract of agency.
Question
“No consideration, no contract”. Analyse.

Source: thehindubusinessline.com

1.9 Summary

Law is defined as a rule of conduct of persons, imposed upon and enforced among the
members of a given state. Ignorance of law is no excuse.

A contract is an agreement enforceable by law.
All agreements are not contracts, but all contracts are agreements.
All agreements are contracts, if they are made by free consent of parties, competent to
contract, for a lawful consideration, and with a lawful object, and are not expressly declared
by law to be void.
Contracts may be classified in terms by their (a) validity or enforceability (b) mode of
formation and (c) performance.
Offer or proposal is the basic building block of a contract. It is made with a view to
obtaining the assent of the offeree.
When the person to whom the offer is made signifies his assent thereto, the offer is said to
be accepted.

It is necessary to communicate offer to the offeree and the acceptance to the offeror.
A contract with a minor is void as he is not competent to contract.
Consideration is what a promisor demands as the price for his promise.

1.10 Keywords

Consideration: When at the desire of the promisor, the promisee or any other person has done
or abstained from doing, or does or abstains from doing, or promises to do or to abstain from
doing, something, such actor abstinence or promise is called consideration for the promise.

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