What is consideration and can a contract without consideration be valid?

Question

A friend promised to pay me for services but there was no money exchanged upfront. I want to know if this promise is legally binding without consideration. What I am unsure about is the procedure — where the application goes, what it costs, and how long consideration contract act matters usually take. A plain explanation of the steps, in order, would help more than a general answer.

MyVakeel Legal Desk · Accepted Answer

The law that applies to consideration contract act here is Indian Contract Act 1872, Section 2(d), Indian Contract Act 1872, Section 25 and Indian Contract Act 1872, Section 23. The detail below matters, because Indian Contract Act 1872, Section 2(d) draws the line differently depending on what your documents show.

Section 2(d) defines consideration as something done, abstained from, or promised at the desire of the promisor, by the promisee or any other person.

As a general rule under Section 10, an agreement without consideration is void, since consideration is one of the essential ingredients of an enforceable contract.

Section 25 carves out exceptions where an agreement without consideration is still valid, such as a written and registered promise made out of natural love and affection between near relations, or a promise to compensate a person who has already voluntarily done something for the promisor.

Consideration need not be adequate, but it must be real and lawful; consideration that is illusory, illegal or opposed to public policy under Section 23 cannot support a contract.

Past consideration is recognised in India, unlike some common law jurisdictions, provided it falls within the Section 25 exceptions or was given at the promisor's desire.

What to do next: 1) Check whether the promise falls within any Section 25 exception if no consideration was exchanged; 2) Reduce any promise involving future payment to a written, signed agreement stating the consideration; 3) Register the document if it involves a family promise based on natural love and affection; 4) Consult a lawyer before relying on an unwritten promise for recovery.

If you are unsure whether your facts fall inside Indian Contract Act 1872, Section 2(d), that is worth checking with an advocate before you commit to a route, because switching later costs time. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in corporate law.