Introduction
Every legal system needs a filter to decide which promises should be binding and which should remain outside the courts. It basically means: if you want the law to protect your promise, you must show that the other side has given or promised to give something in return.
This idea is contained in Section 2(d) of the Indian Contract Act, 1872, which says that an act, abstinence, or promise, made at the desire of the promisor, by the promisee or even a third person, counts as consideration. In other words, a promise without something in exchange is usually just a moral obligation, not a contract.
But the relevance of this rule in the twenty-first century is being questioned. Global trade, digital contracts, and evolving social norms often push against the old boundaries of “something in return.” The debate is whether India should continue with the traditional approach, or reform the law to suit modern realities.
How the Doctrine Entered Indian Law
It was imported from English common law, which heavily influenced the drafters of the Indian Contract Act. In England, consideration was seen as the very foundation of enforceability: without it, even a written agreement could be struck down.
Indian law, however, made two important departures:
1. Consideration can move from the promisee or any other person (wider than English law, where only the promisee could furnish it).
2. Consideration can be past, present, or future, whereas English courts often rejected past acts.
The case of Chinnaya v. Ramaya (1882) demonstrates this difference. A daughter promised to pay an annuity to her mother, even though the benefit came from a third party. The court upheld the promise, proving that Indian law is more liberal in recognizing consideration.
Essentials of Valid Consideration
To understand how the doctrine works in practice, a few essentials must be noted:
• It must be at the desire of the promisor; voluntary acts done without request do not count.
• It may come from the promisee or another person, unlike in England.
• It may be past, present, or future, as long as it has value in the eyes of law.
• It must be lawful, real, and possible illegal or impossible acts cannot be valid consideration.
These conditions show how the law tries to balance fairness with practicality.
Why the Doctrine Still Matters
Even though critics call it outdated, the doctrine plays some important roles:
• It separates serious promises from casual ones.
• It creates reciprocity, ensuring contracts are not one-sided.
• It prevents the legal system from being flooded with claims based on purely moral or social duties.
So, the doctrine is not entirely useless; it acts as a safeguard against abuse of the courts.
Major Criticisms
Despite its benefits, the doctrine is far from perfect:
- Technical rigidity – Sometimes courts refuse to enforce genuine promises simply because they lack consideration. For example, a father promising financial help to his son without return benefit may not be enforceable.
- Judicial inconsistency – In Abdul Aziz v. Masum Ali (1914), a donation promise was struck down for want of consideration, but in Kedar Nath v. Gorie Mohamed (1886), a similar promise was upheld because expenses had been incurred. Such contradictions weaken certainty.
- Overlap with “intention” – Modern contract law already asks whether the parties intended legal relations.
- Artificial constructions – Courts sometimes “invent” consideration to uphold contracts they believe should stand. This undermines the integrity of the doctrine.
Comparative Developments
Looking abroad, we find that the doctrine of consideration is slowly losing ground:
• United States: The Uniform Commercial Code (UCC) allows modification of contracts without fresh consideration, provided it is done in good faith.
• Civil law countries like France and Germany do not require consideration at all. They focus only on consent and lawful object.
• International trade law, such as the CISG, also does not make consideration mandatory.
This comparative perspective shows that India is increasingly out of step with global practices.
Why Reform is Needed in India
1. Changing commercial practices – Modern business deals often involve complex structures like franchise agreements, digital subscriptions, or licensing arrangements where traditional consideration is difficult to trace.
2. Rise of electronic contracts – In online click-wrap or browse-wrap agreements, the traditional notion of consideration often looks artificial.
3. Cultural context – In India, many family or community promises carry serious intent, yet they remain unenforceable because they lack consideration.
4. Global competitiveness – To attract foreign investment and harmonize with international trade law, India must modernize its contract framework.
Suggested Reforms
1. Recognize intention as an alternative – If clear intention to create legal relations is proven, enforce the promise even without consideration.
2. Broaden Section 25 exceptions – At present, certain promises (e.g., made out of natural love and affection, or to compensate for voluntary services) are enforceable without consideration. Expanding these categories could reduce injustice.
3. Legislative amendment – Parliament could insert specific provisions clarifying that consideration is not essential in certain commercial and digital contexts.
4. Purposive judicial approach – Courts should interpret the doctrine flexibly, focusing on fairness and reliance, rather than rigid technicalities.
Conclusion
The doctrine of consideration once served as the backbone of contract law, ensuring reciprocity and seriousness in agreements. But with changing times, its rigidity often blocks justice rather than promoting it. India has already softened the English rule by recognizing past consideration and allowing it to move from third parties. Yet further reform is essential.
By treating intention, fairness, and reliance as equally valid grounds for enforceability, Indian law can strike a better balance.This would preserve the doctrine’s protective role while preventing it from becoming an unnecessary barrier in modern commerce and society.
Reform, therefore, is not only desirable but necessary to make the Indian Contract Act more relevant, efficient, and globally compatible in the twenty-first century.
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