Section 2(d) of the Indian Contract Act defines consideration as under:
When, at the desire of the promisor, the promisee or any other person (1) has done, or abstained from doing or (2) does or abstains from doing, or (3) promise to do or to abstain from doing something, such act or abstinence or promise is called a consideration for the promise.
Every contract consists of two parts: (1) promise and (2) consideration for the promise. Promises are often made in return for a promise, for example a buyer purchases the goods for a price. Price for the promise is consideration here. Promise for a promise in return is ‘consideration’.
Consideration is the cause of the promise. It is one of the essential elements of the contract. As a general rule section 23 provides that agreement without consideration is void.
A agrees to sell is house to B for 10,000. Here’s A’s promise to sell his house for B’s consideration to pay Rs 10,000. Similarly, B’s promise to pay Rs 10,000 is for A’s consideration to sell his house to B.
Thus the essential condition for the enforceability of the contract is consideration. The rule is expressed by the Latin maxim “exnudo-pacto non-oritur actio” or example out of a bare promise cause of action can arise. Therefore a gratuitous promise such as a promise to make a gift or charity for no return is not supported by consideration. Hence it is unenforceable by the promise.
The basis of consideration is that of reciprocity. A promisee would be able to enforce the promise only if he has given or promised to give or unless the promisor has obtained or has been promised something in exchange of it. The rule therefore, states consideration no contract.
The word ‘consideration’ implies some thing in return for the promise or the price of promise or quid pro quo. In Fazaluddin v Panchu Das, the Calcutta High Court observed that ‘consideration is the price of a promise, a return or quid pro quo something of value received by the promise as inducement of promise. The authorities on the subject have defined consideration as “the price paid by the plaintiff for the defendant’s promise.” An act or forbearance of one party or the promise thereof, is the price for which the promise of the other is brought and the promise thus given or value is enforceable. Blackstone defines consideration as the recompense given by the party contacting to the other.
The substance of the above definition is that the consideration is the price agreed to be paid by the promisee for the obligation of the promisor.
Justice Patterson observed: consideration means something which is of value in the eye of law moving from the plaintiff; it may be some detriment to the plaintiff or some benefit to the defendant
Now, a person may promise to do or not to do something, for example, he may refrain or forbear from doing something it would be consideration in wither respect. Forbearing to exercise existing and enforceable right is a good consideration. Where a wife forbears to sue her husband for maintenance allowance on her husband agreeing to pay her monthly allowance by way of maintenance, the contract is supported by consideration Forbearance to sue is, therefore a good consideration. Supreme Court has held that abstinence on the part of the promisor to do something an undoubtedly be consideration or a contract.
However, a person cannot contract himself out of a legal obligation which is his duty to perform. A person cannot, against a consideration agree to refrain or forbear to perform his legal obligations. Such an agreement would be void as being against public policy. Compromise of a claim is sufficient agreement. However, the claim should be bonafide and Frivolous, false, vexation or forged claims cannot sustain an agreement.