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Agreement without Consideration in India – Mercurius
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Agreement without Consideration in India

Agreement without consideration in India: Understanding the legal principles

In India, an agreement without consideration is referred to as a `nudum pactum.` It is an agreement that lacks consideration or mutual promises and, therefore, is not considered legally binding. In simple terms, an agreement without consideration refers to a contract that does not involve the exchange of anything of value.

The Indian Contract Act, 1872, lays down the legal framework for all contracts. As per Section 2(d) of the Act, consideration refers to “when, at the desire of the promisor, the promise or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.”

Thus, consideration is an essential element of a valid contract. In the absence of consideration, there can be no valid contract. However, there are exceptions to this rule.

One such exception is the doctrine of promissory estoppel. It is based on the principle that if one party has made a promise to another, knowing that the other party will rely on it, and the other party has, in fact, relied on the promise, then the first party cannot go back on the promise.

For example, if A promises to give Rs. 10,000 to B, and the latter relies on the promise and spends money on something that he would not have otherwise done, A cannot back out of the promise. This is because B has incurred a loss based on A`s promise, and to allow A to back out would be unfair.

Another exception is an agreement made out of natural love and affection. In such an agreement, the consideration is deemed to be the love and affection shared between the parties. A classic example of such an agreement is a gift or a will.

For instance, if A gifts a piece of property to B out of natural love and affection, then the gift is considered valid, even though there is no monetary consideration involved.

It is worth noting that an agreement without consideration is not the same as an agreement with inadequate consideration. In the latter case, the contract is still valid, as long as there is some consideration, even if it is less than what would be expected.

To conclude, an agreement without consideration is generally not legally enforceable in India. However, there are exceptions to this rule, such as the doctrine of promissory estoppel and agreements made out of natural love and affection. As with everything, it is best to seek professional legal advice to understand the nuances of each case.


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