Legal rules regarding consideration for CLAT - Practice Questions & MCQ

• Consideration is the cornerstone of a contract. It refers to something of value exchanged between parties. This can be money, goods, services, or even promises to do or not do something.
• Example: You promise to pay your friend Rs. 5,000 in exchange for his laptop. Here, the laptop is the consideration you receive for your payment.
• Consideration is an essential element of a valid contract. Without it, an agreement may lack legal enforceability.
• Example: If you promise to give your friend a gift without expecting anything in return, it might not be considered a legally binding contract because there's no consideration from your friend's side.

Necessity for Valid Contracts:

• Consideration is an indispensable element for a contract to be valid and legally enforceable. Without consideration, an agreement is generally not binding.
• Example: If you promise to give your friend a book as a gift without expecting anything in return, this may not create a legally binding contract due to the absence of consideration from your friend.

Legal Rules:

• Consideration must be real and not illusory. It should have some value in the eyes of the law.
• Example: Suppose you promise to give your friend a "magic" laptop that doesn't exist. This promise lacks real consideration and may not be legally enforceable.

Past Consideration:

• Generally, past consideration (something given or done before the contract) is not considered valid consideration.
• Example: If you repaired your friend's laptop last week without any prior agreement, you can't demand payment now based on past consideration.

Indian Constitution - Article 19(1)(g):

• Article 19(1)(g) of the Indian Constitution guarantees the right to practice any profession, carry on any occupation, trade, or business. Contracts are instrumental in exercising this fundamental right.
• Example: If you enter into a contract to provide a service or sell goods, you are exercising your right under Article 19(1)(g).

Public Policy and Consideration:

• Contracts that go against public policy, such as those promoting illegal activities, lack valid consideration and are unenforceable.
• Example: A contract to sell illegal drugs cannot be enforced because it violates public policy.