WHEN

AGREEMENTS
WITHOUT
CONSIDERATION
ARE
ENFORCEABLE?

Submitted by: ADIBA MAAZ

TO: MR.BURHAN MAJID
1ST SEMESTER/BA LLB
 WHEN AGREEMENTS WITHOUT
CONSIDERATION ARE ENFORCEABLE?
A contract is an agreement. The term “contract” is defined in section 2(h) of
the Indian contract act, 1872 as follows: “ An agreement enforceable by law
is a contract”
Therefore, it is inferred that to form a contract there must be
1) An agreement and
2) The agreement should be enforceable by law.

AGREEMENT
It is defined under Section 2(e) as “every promise and every set of
promises forming the consideration for each other”.
Section 2(b) says: “a proposal, when accepted becomes a promise”. This is
another way of saying that an agreement is an accepted proposal.
From all the definitions we get a basic understanding that a contract is an
agreement, an agreement is a promise and a promise is an accepted proposal.
Thus every agreement in its ultimate analysis is the result of a proposal from
one side and its acceptance by the other.
In order for any agreement to be deemed legally binding, it must include
consideration on the part of every person or company that enters the
contract.
Section 25 of the Indian contract act opens with the declaration that “ an
agreement made without consideration is void”. Consideration has been
variously defined. Basically, consideration is the benefit that each party
gets or expects to get from the actual contractual deal.

Consideration has to be there in an agreement for it to turn into a contract.

Section 2(d) says, “When at the desire of the promisor the promise or any
other person has done or abstains from doing or does or abstain from doing
or promise to do or to abstain from doing something. Such an act or
abstinence or promise is called a consideration”.
It is rather a practical definition. It simply emphasizes on the fact that
consideration is some act, done or is promised to be done.
As consideration is an integral part of a contract.
We know that an agreement without consideration is void. And a void
agreement is not enforceable by law. That means there is no legal redress in
case of void agreements. So as per As per Section 10 and Section 25 of the
Indian Contract Act, 1872, consideration is essential in a valid contract. In
simple words, no consideration no contract. Hence, you can enforce a
contract only if there is a consideration.

In contrast to English law, a contract under seal is enforceable without

consideration. The English Law allows contracts under seal enforceable
without consideration. A contract under seal means a contract which is in
writing and which is “signed, sealed and delivered” In the words of Anson
English law recognizes only two kinds of Contract, the contract made by
deed that is unless seal which is called a deed or specialty, and the simple
conflict.
It is understandable that an agreement is enforceable with consideration but
is it enforceable without consideration?
Indian law, however, does not recognize any such exceptions. But Section
25 of the Indian contract act lays down few exceptions.
Section 25 declares that an agreement without consideration is void. This of
course, subject to a few exceptions.
-Unless a contract is in writing and registered or is a promise to
compensate for something done or is a promise to pay a debt barred by
limitation law

1) It is in writing and registered – it is expressed in writing and

registered under the law for the time being in force for registration of
(documents), and is made on account of natural love and affection
between parties standing in a near relation to each other.
 NATURAL LOVE AND AFFECTION
The essence of the first exception is that a written and
registered agreement based on natural love and affection
between near relatives is enforceable without consideration.
Love and affection has to be the basis of the promise because
otherwise emotional expressions and human sentiments cannot
take place of consideration in the material sense of the word.
However the act provides no guidance nor has the expression
judicially construed to explaining who a near relative is?
The expression without doubt will include parties related by
blood or marriage The terms “near relation” and “natural love
and affection” as mentioned in Section 25 (1) of the Indian
Contract Act 1872 are extremely vague and inadequate as
there is always some level of love and affection between the
parties nearly related.
In the case of Rajlukhy Dabee v. Bhootnath Mukherjee, the
defendant promised to pay his wife a certain amount every
month as maintenance. The promise was made in writing and
the quarrels the husband and wife had were also mentioned. A
case was filed to recover the amount promised to be paid as
maintenance. However, the judge decided in favor of the
defendant as although the two were in a near relation, the court
held that there was no natural love and affection between them.
In contrary, in the case of Bhiwa vs. Shiva ram two brothers
quarreled regarding some property. One of them lost, upon
which the other brother promised through a written and duly
registered agreement that he would give half his property away
to him. He later backed out. When taken to court, however, the
court held that, “that this is just the case to which Section 25(1)
should be held to apply. The defendant had such natural love
and affection for his brother that in order to be reconciled to
him, he was willing to give him his property”. Section 25(1)
applies since the brother had made the promise out of natural
love and affection for someone who was a near relative, and
therefore the brother was held liable to comply with his
promise.
However these two judgments are extremely contradictory – if
natural love and affection does not apply in the first case, there
is no logical reason as to why it should have applied in the
second case. The term “natural love and affection” is a very
 subjective term and cannot be defined. It can easily be taken
advantage of.

Nevertheless, simply because natural love and affection cannot

and should not be defined, removing ‘natural love and
affection’ and just keeping the term ‘near relation’ without
defining it would also be disastrous. Therefore, the term ‘near
relation’ must be defined clearly and only upon defining near
relation should the term ‘natural love and affection’ be
removed.

Considering how previous judgments have decided that a near

relation is one in which natural love and affection is
consideration, relationships that commonly involve natural love
and affection must be defined as relationships that fall
under a near relation. That is, immediate family (i.e., children,
parents, siblings, spouses, grandchildren and grandparents)
only. While such a definition might be considered as too narrow
a definition, it would provide a clearer framework than allowing
the courts to decide what natural love and affection is.

2) Or is a promise to compensate for something done- it is a promise

to compensate, wholly or in part, a person who has already voluntarily
done something for the promisor, or something, which the promisor
was legally compellable to do.
 In other words, a promise to pay for a past voluntary service is
binding. It is necessary to attract this exception that the service
should have been rendered voluntarily and also for the
promisor. For example, If A supports B’s infant son and B
promises to pay A’s expenses in so doing. This is a contract.
Noting that B was legally bound to support his infant son. As
per this exception, the promise must be to compensate a person
who has himself done something for the promisor and not to a
person who has done nothing for the promisor.
 Thus where the service was rendered for a company not then in
existence, a subsequent promise to pay for them could not be
bought within the exception. But a promise to pay
 The promisor must have intended to compensate the promise.
  If a person has done a voluntary service in the past and the
beneficiary promises to pay at a later then the contract is
binding provided that:

 The service was rendered voluntarily in the past

 It was rendered to the promisor
 The promisor was in existence when the voluntary service was
done (especially important when the promisor is an
organization)
 The promisor showed his willingness to compensate the
voluntary service.
 ILLUTRATIONS
(a) A finds B’s purse and gives it to him. B promises to give A Rs 50. This is a
contract.

(b) A supports B’s infant son. B promises to pay A’s expenses in so doing. This is
a contract14 (Note that B was legally bound to support his infant son.)
(c) A rescued B from drowning in the river, and B, appreciating the service that
has been rendered, promises to pay Rs 1,000 to A. There is a contract between
A and B.

In order to attract this exception, it should be noted that the promise must be to
compensate a person who has himself done something for the promisor and not
to a person who has done nothing for the promisor. Thus, where B treated A
during his illness but refused to accept payment from A; they being friends; and A
in gratitude promises to pay Rs 1,000 to B’s son D, the agreement between A
and D is void for want of consideration as it is not covered under the exception.

3) Or is a promise to pay a debt barred by limitation law- it is

promise, made in writing and signed by the person to be charged
therewith, or by his agent generally or specially authorized in that
behalf, to pay wholly or in part a debt of which the creditor might
have enforced payment but for the law for the limitation suits.
 Lastly, a promise to a time-barred debt is enforceable. The
promise should be in writing. It should also be signed by the
promisor 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”.
 This type of no-consideration contract falls under Section
25(3) and for invoking it, some essentials must be satisfied:

1) There should be a written promise signed by a person or his

appointed agent.
2) A promise must be there, either to pay a whole or a part of the
debt.
3) The creditor must have enforced the debt for the limitation
period.

A debtor can enter into a written agreement under Section 25(3)

for paying a part of the complete debt.

 Debt barred by limitation

The term “debt” denotes an ascertained amount of money
which is payable in respect of money demand and by action,
may be recovered. Section 25 (3) only applies when there is the
applicability of the law of limitation and with its aid; the debt is
enforceable against the defendant. Section 25 (3) is not
applicable when the defendant is not bound to pay the debt for
other reasons.

 Promise to pay
This is a condition precedent for the application of this section.
The promised referred to in Section 25(3) must be an express
one and cannot be held to be sufficient if the intention to pay is
unexpressed and has to be gathered from a number of
circumstances and it must not be qualified to result in any kind
of confusion i.e. it must be equivocal. Section 25 (3) is not
applicable when there is a suit relating to arrears beyond
limitation period, of a rent. In addition, for an endorsement to
comply with the exception under Section 25 (3), the promissory
note must consist of an undertaking to pay.
RAKESH KUMAR DINESH KUMAR v UG HOTELS&
RESORTS LTD, AIR 2006, HP, the buyer
 Promise must be in writing. The promise must comply
with all the norms under Article 299 of the Indian
 Constitution relating to the contractual power of the
Government. The contract must be in written form. It
should be in writing and also signed by the promisor or
by his agent. It is necessary that the person who was
liable for the original time-barred debt should give
the promise? The Bombay high court has held in the
case of Pestonji Manekji Mody v Bai Meherbai that “a
promise made by a person who is under no obligation
to pay the debts of another does not fall within the
clause”. In the case of Puliyath Govinda Nair v
Parekalathil Achutsn Nair the Madras high court said
“the words’ by the person to be charged with thereby
with’ in the section 25(3) are wide enough to include
the case of person who agrees to become liable for the
payment of debt due by another and need not be
limited to the person who was indebted from the
beginning. “

 To pay wholly or in part:

The promise to pay a debt barred by the law of limitation can
restrict itself to pay a part or may extend for the whole debt.
But, when only a part of the debt is time-barred and the
promisor takes an undertaking to pay all the debts. The
Bombay High Court holds the opinion that “a promise made
by a person who is under no obligation to pay the debts of
another…does not fall within the clause.” But according to
the Madras High Court “the words ‘by the person to be
charged therewith’ in section 25(3) are wide enough to
include the case of a person who agrees to become liable for
the payment of a debt due by another and need not be
limited to the person who was indebted from the
beginning.”

4) COMPLETED GIFT:
The provisions as to consideration do not affect, as between
donor and done, the validity of any gift which was actually
been made. A gift of movables, which has been completed by
delivery, and gift of immovable, which has been perfected by
registration, cannot be questioned as to their validity only on
the ground of lack of consideration. They may be questioned
otherwise. Explanation (1) to Section 25 of the Indian Contract
Act, 1872 provides that, “nothing in this section shall affect the
validity as between donor and done, of any gift actually made”.
A gift therefore is a valid contract even though without
consideration for one party. A promise of charity likewise is a
valid contract (Kadarnath v. Gorie Mohammad).

CONCLUSION
Therefore we can conclude that even though consideration has
not been paid in all these cases yet the contract is fully valid
because somewhere or the other they has been either a past a
voluntary services been render or they has been natural love and
affection or they has been recognition of any other kind of
services that have been render to the person while he was alive
and has recognize the services. It’s a well-known fact that a
contract is never complete without the presence of
consideration. Consideration answers the question why one is
entering into a contract. However there are certain exceptions to
this rule according to Indian contract act and therefore a
contract can be valid even thought if there is no consideration.
And these exceptions are helpful in the above-discussed
situations.