Consideration is one of the most essential element to constitute a contract. Consideration means "something in return". It is the price paid for the Contract. Section 2(d) of the Indian Contract Act, 1872 defines Consideration as "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 act or abstinence or promise is called a consideration for the promise"The General rule is that an Agreement without Consideration is Void. Section 25 of the Indian Contract Act, 1872 deal with the exception to this rule. In such cases, the agreements are enforceable even though they are made without considerations. These cases are as follows:
1) Love and Affection
According to Section 25(1) of the said Act, where an agreement is expressed in writing and registered under the law for the time being in force for the registration of documents and is made on account of natural love and affection between parties standing in a near relation to each other, it is enforceable even if there is no consideration,
A, for natural love and affection, promises to give his son, B, $ 1,000. A puts his promise to B into writing and registers it. This is a contract.
2) Compensation for Voluntary services
According to Section 25(2), A promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, is enforceable, even though without consideration.
(i) A finds B’s purse and gives it to him. B promises to give A $ 50. This is a contract.
(ii) A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a contract.
3) Promises to pay a time barred debt
A promise made by a debtor to pay a time barred debt is enforceable provided it is made it is made in writing and signed by the debtor or by his agent generally or specially authorized in that behalf. The promise may be to pay the whole or any part of the debt. The debt must be such "of which the creditor might have enforced payment but for the law for the limitation of suits," such an agreement is a contract.
A owes B $ 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B $ 500 on account of the debt. This is a contract.
4) Completed Gift
According to Section 25 Exception 1 "No Consideration, no Contract does not apply to Completed Gifts.
According to Section 185 of the Indian Contract Act 1872, No consideration is necessary to create an agency.
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