Validity of an agreement without consideration Under Indian Contract Act
According to section 2(d) of the Indian contract Act, 1872, defines consideration as “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) to abstain from doing, something, such act (or) abstinence (or) promise is called a consideration for the promise”.
An agreement made without consideration is void. In the following cases, the agreement though made without consideration will be valid and enforceable according to sections 25 and 185 are as follows:-
1. Nature love and affection:
An agreement made without consideration is valid if it is made out of love, nature, and affection such agreements are enforceable if
• The agreement is made in writing and registered.
• The agreement must be made between the parties standing in near relations to each other and
• There must be nature, love, and affection between the parties
2. Compensation for past voluntary services:
A promise made without consideration is valid if, it is a person who has already done voluntarily done something for the promisor, is enforceable, even though without consideration. In simple words, a promise to pay for past voluntary service is binding
3. Promise to pay Time-Bared debt:
An agreement to pay a time-bared debt is enforceable if the following conditions are satisfied.
• The debt is a time-barred debt
• The debtor promises to pay the time-barred debt.
• The promise is made in writing.
• The promise is signed by the debtor.
4. Completed gifts:
The rule “No consideration – No contract” does not apply to completed gifts. According to sections 1 to 25 states, “nothing in section 25 shall affect the validity, as between the donor and donee, of any gift actually made”
According to section 185, no consideration is necessary to create an agency.
6. Charitable subscription:
Where the promisee on the strength of promise makes commitments (i.e.., changes his position to his liability/detriment).