BCOC-133 BUSINESS LAW CHAPTER-5 CONSIDERATION AND LEGALITY OG OBJECT

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BCOC-133 BUSINESS LAW
CHAPTER-5 CONSIDERATION AND LEGALITY OG OBJECT

MENING OF CONSIDERATION:-It refers to something value( such as goods, money, services or promise) exchanged between parties to a contract . both parties must provide consideration for the contract to be valid and enforceable.

LEGAL RULES FOR VALID CONSIDERATION:-

  1. Bargained-for-exchange:-like any other legal systems, there must be a mutual agreement or bargain between parties involved in the contract

  2. Consideration may be past ,present or future:-in India consideration may be past, present or future

  3. Legal value:-consideration must have legal value ,and it can take various forms, including money , goods, services or promises to act or refrain from acting

  4. Consideration may move from the promise or any other person:-consideration done by the promise himself or by any other person (considered as stranger to consideration)

  5. Consideration must be legal:- consideration which is not legal naturally has no value in the eyes of law, and therefore cannot be real consideration, the main points of legal rules of consideration follows:-

    • Consideration must move at desire of the promiser

    • Consideration may be past, present or future

    • Consideration must be of some value

    • Consideration must be legal

      STRANGER TO CONTRACT AND STRANGER TO CONSIDERATION:-

  • In India consideration is permitted to supply by any persons and it need not necessarily supplied by the promise himself. Thus the concept of “stranger to consideration” is valid acceptable concept

  • A stranger to contract means a person who is not party to the contract, such person cannot bring a valid suit

    EXCEPTIONS:-
    Stranger to contact may enforce a claim In the following cases:-

    • Beneficiary under trust or charge

    • Marriage settlement

    • Acknowledgement of liability or estoppel

    • Family settlement

    • Assignment of contract

      ADEQUACY OF CONSIDERATION:-

      Indian courts typically do not asses whether the value exchanged is proportionate , recognizing the parties are the best judges of the value what they are exchanging . however there some exceptions , if there is evidence of fraud, undue influence , coercion , mistake or if the consideration is so grossly inadequate that it shocks the conscience of the court, the issue adequacy may be considered

LEGALITY OF AGREEMENT WITHOUT CONSIDERATION:-

In contract law, the general rule is that for a contact to be valid there must be consideration exchanged between the parties. Consideration refers to something of value given by each party, whether its money, goods, services or a promise to do something . however there are certain exceptions where an agreement without consideration may still be legally enforceable:-

  • Agreement in writing and registered:- an agreement made without consideration is valid if its:-

    a) Expressed in writing
    b) Registered
    c) Made on account of love and affection and
    d) Between parties standing in a near relation to each other

  • Promise to compensate:- a promise made without consideration is valid if
    a) It’s a promise to compensate (wholly or in part)
    b) The person to be compensated has already done something voluntarily or has

    done something which the promisor was legally compellable to do

  • Promise to pay a debt barred by limitation act

  • Gifts

  • Agency

  • Charity

    LEGALITY OF OBJECT AND CONSIDERATION:-

    In contract of law, both the object and consideration are essential elements for a valid and legally enforceable contract.

    An agreement will not be enforceable if its object or the consideration is unlawful. According to section 23 of the Act, the consideration and object of an agreement are unlawful in following cases:-

    1. a)  If its forbidden by law:- if the object or the consideration of an agreement is the doing of an act forbidden by law, the agreement is void, it is punishable by the criminal law of the country

    2. b)  If it’s defeats the provisions of any law: if the object or consideration of an agreement is of such nature that, though not directly forbidden by law it would defeat provisions of the law the agreement is void

    3. c)  If its fraudulent

    4. d)  If its involve or implies injury to the person or property of another

    5. e)  If the court regards it as immoral or opposed to public policy

    6. f)  Partial illegality:-if any part of single consideration for one or more object, or any

      part of any one of several considerations for single object is unlawful the agreement is void

    AGREEMENT OPPOSED TO PUBLIC POLICY:-A deal or contract between parties that goes against what society considers fair, just, or morally right, if an agreement involves something illegal, fraudulent , harmful or goes against basic society values, it may considered against public policy . it includes:-

1. Trading with enemy:- all contract made with enemy(foreigner), unless made with permission of government , are illegal on the ground of the public policy

  1. Agreement for stifling prosecution:-contract for compounding or suppressing of criminal charges for offences of a public nature are illegal and void

  2. Contract in the nature of champerty and maintenance:-agreement of maintenance and champerty are void on the ground of their being opposed to public policy

  3. Agreement for the sale of public offices and titles

  4. Agreements in restraint of parental right

  5. Agreement in restrain of marriage

  6. Marriage brokerage or brokerage contract

  7. Agreement restraint of legal proceeding

  8. Agreement interfering with course of justice

10.Agreement in restrain of trade

11.Agreement tending to create monopolies 12.Agreement in restrain of personal liberty

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