Consideration is the recompense Free Essay Example

An Agreement here is defined as every promise and every set of promises, forming the consideration for each other, is an agreement defined under section 2(e) of Indian Contract Act, 1872. Making a contract is simply a way of facilitating amongst other things, the exchange of goods and services. Under a contract the, parties voluntarily assume their obligations or undertakings.

Consideration is the recompense given by the party contracting to the other. Consideration is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.

Consideration means something which is of some value in the eyes of the law. A valuable consideration in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.

If a bargain gives a party a choice of alternative obligations, each alternative on its own must constitute sufficient consideration for the return promise.

If a promise is void or voidable – e. g. , due to the incapacity of the promisor – the sufficiency of the consideration is not necessarily negated.

The judges, when they exercise this power of interference, are playing an extrinsic test which frustrates the expectation of the parties. It does not follow however, that such a test is necessarily harsh, still less that it is illogical. In some of the cases the law is settled, other are shrouded in controversies; but in all of them the grounds of interference seems to be the same.

Consideration made not be adequate and may, on occasion be extremely tenuous, but it must comprise ome element which can be regarded as the price of the defendant promise; and merely to repeat an existing obligation may well seem to offer nothing at all.

It may be appreciated that a person, who by his official status or through the operation of the law is under a public duty to act in a certain way, is not regarded as furnishing consideration merely by promising to discharge the duty. For example, no one would expect a policeman to bargain with a citizen for the price of his protection. In the case stated the defendant argued that this meant that they were not obliged to pay for the large number if policemen who attend their ground at home matches because, in present conditions of crowd behaviour, a major police presence at the ground was necessary to preserve law and order.

The Court of Appeal thought that there was a fundamental difference on the facts. In the Glassbrook case the threat to law and order was external to the parties since neither could call off the strike. In the present case, the defendant had voluntarily to put on their matches at times, typically Saturday afternoons, when large attendance and therefore large possibilities of disorder where likely, and when a substantial police presence could only be achieved by calling policemen of their rest days and paying large sum of overtime. The police authority were, therefore, entitled to be paid.

When the plaintiff is bound by an existing contractual duty to the defendant : There is no consideration if all that the plaintiff does is to perform, or to promise the performance of, an obligation already imposed upon him by previous contract between him and the defendant – is illustrated by a group of thesis in the first half of 19th century. In this case the defendant where a firm of building contractors who entered into a contract for the refurbishment of a block of 27 flats. They sub – contracted the carpentry work to the plaintiff for 20,000.

Although there was no formal arrangement to this effect, the plaintiff was paid money on account. After the contract had been running for some months and the plaintiff had finished the carpentry at 9 of the flats and done some preliminary work in all the rest, for which he had received some 16,200 on account, he found that he was in financial difficulties. This difficulties arose partly because the plaintiff had underestimated the cost of doing the work in the first place and partly because of faulty supervision of his work men.

The plaintiff and the defendants had a meeting at which the defendants agreed to pay the plaintiff a further 10,300 at a rate of 575 per flat to be paid as each flat was completed. The plaintiff carried on work and finished some 8 further flats but only 1one further payment of 1,500 was made. The plaintiff stopped work and brought an action for damages. The defendant argued that they were not liable as they had simply promised to pay the plaintiff extra for doing what he has in any case obliged to do, that is to finish to the contract.

The Court of Appeal might perhaps have found consideration in what Russell LJ described as the replacement of ‘a haphazard method of payment by a more formalised scheme involving the payment of the specified sum on the completion of each flat’ since it was clear that the under the original contract there was no express agreement for stage payments. 3. Composition with creditors : It has long been a common practise for the creditors of an impecunious debtor to make an arrangement with him where by each agrees to accept a stated percentage of his debt in full satisfaction.

The search for a sufficient consideration to support so reasonable an agreement has caused the courts much embarrassments. It would appear at first sight to fall under the ban in Pinnel’s case, and such was the view adopted in 1804 by Lord Ellenborough. Two alternatives suggestions have been proffered. The first was the second thought of Lord himself. There was consideration for the composition, he suggested in 1812, in the fact that each individual creditor agreed to forgo part of his debt on the hypothesis that all the other creditors would do the ame. A moment’s reflection will expose the weakness of this argument. Such a consideration would, no doubt, suffice to support the agreement as between the creditors themselves. But, if the debtor sought to rely upon it, he would be met by the immediate objection that he himself had furnished to return for the creditors’ promises to him, and, as already observed, it is a cardinal rule of the law that the consideration must move from the promisee.

A second solution is to say that no creditor will be allowed to go behind the composition agreement, to the prejudice either of the other creditors or of the debtor himself, because this would be a fraud upon all the parties concerned. The solution was suggested by Lord Tenterden in 1818 and supported by Willes J in 1863, and it has since won general approbation. But it is frankly an argument ab inconvenienti and evades rather than meets the difficulty.

Where the plaintiff is bound by an existing contractual duty to a third party : When the plaintiff performs, or promises to perform, an obligation already imposed upon him by a contract previously made, not between him and the defendant, but himself and the third party. The question whether such a promise or a performance affords suficient consideration has provoked a voluminous literature – more generous, indeed, then the practical implications would seem to warrant. In a case mentioned here the defendant agreed to pay money to he plaintiff in return for the plaintiff promise (a) to execute a separation deed and b)to pay his debts to a third party. The promise to execute the separation deed raised questions of public policy but was held good consideration.