Consideration Contemplated in India Under Law of Contract is Essential
The Indian Contract Act, 1872 defines a contract as an agreement enforceable by law. For an agreement to be enforceable, it must contain an essential element called ‘consideration.’ Consideration is the price paid by one party, which is usually a benefit to the other party, for entering into the contract. In India, consideration is a vital aspect of a contract and must be present for a contract to be valid.
Consideration is defined as something of value given in exchange for goods or services. Under the Indian law of contract, consideration may be in the form of money, goods, services, or anything else of value that both parties agree on. It can be given before or after the contract is signed, or even as a promise to give something in the future, as long as there is a mutual understanding between the parties.
The concept of consideration is important because it creates an obligation on both parties to fulfill their promises. In other words, if one party does not fulfill their promise, then the other party can sue for breach of contract. Consideration is the foundation of an enforceable agreement, and without it, a contract is merely a casual agreement between two parties.
Furthermore, consideration also ensures that both parties have something to gain from the contract. It is a form of protection for both parties, as they enter into the agreement with a clear understanding of what they expect to gain from it. This is why it is essential to have clear and unambiguous terms in the contract, including the consideration clause.
There are, however, some exceptions when consideration is not necessary for a contract to be valid. These exceptions include contracts made under seal, donations, and contracts made out of natural love and affection. In these cases, although consideration is not explicitly stated, these contracts are still enforceable.
In conclusion, consideration is an essential element of a contract in India. It ensures that both parties have something to gain from the agreement, and creates an obligation on both parties to fulfill their promises. Any ambiguity or lack of clarity in the consideration clause can result in disputes and legal issues. Therefore, it is crucial for parties entering into a contract to understand the importance of consideration and to ensure that the clause is clear and unambiguous.