CONSIDERATION
1
SECTION 2(d) OF THE CONTRACT ACT
“When, at the desire of the promisor,
the promisee 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”
2
consideration
Some right
interest
profit
To support
the promise
To one party
3
Section 26 of the Contract Act
provides that
as a general rule, an agreement
without consideration is void
4
Types of consideration
Executed
consideration
• Wholly
performed on
one side
immediately
the contract is
entered into
Executory
consideration
• Is a promise
to confer a
benefit or to
suffer some
detriment at
some future
time.
Past
consideration
• If the act done
was at desire
of the
promisor, then
such act
would
constitute
consideration.
5
Rules of Consideration
Consideration
must be real
Consideration
need not be
adequate
Past
consideration is
good
consideration
Consideration
need not move
from the
promisee
6
Consideration must be real
Glasbrook Bros
V
Glamorgan
Collins
V
Godefroy
Ward
V
Byham
7
Glasbrook Bros V Glamorgan
The manager of a colliery requested police protection during
a strike and asked that police be billeted on the premises.
The police arranged for this to be done and thus gave more
secure police protection than applies generally throughout
the area
When sued for the cost by the police authority, the colliery
owners refuse to pay on the ground that the police were
under a public duty to give police-protection.
Held:
That police had done more
than they were bound to do
and that special protection was
sufficient consideration in
support of the contract
8
Consideration need not be adequate
Chappell & Co Ltd
V
Nestle Co Ltd.
Phang Swee Kim
V
Beh I Hock
9
Past consideration is good consideration
KEPONG PROSPECTING LTD & ORS
V
SCHMIDT
10
Consideration need not move from the promisee
Venkata Chinnaya v Verikataramaya
A sister agreed to pay an annuity of Rs653 to her brothers who
provided no consideration for the promise. But on the same day
their mother had given the sister some land, stipulating that she
must pay the annuity to her brothers.
Held:
She was liable to pay the annuity. There was good consideration for
the promise even though it did not move from her brothers.
11
S26: AN AGREEMENT MADE WITHOUT
CONSIDERATION
an agreement made without consideration is void
26(a)
unless
26(b)
26(c)
12
Tan Soh Sim,Chan
Law Keong & Ors v
Tan Saw Keow &
Ors
It is in writing
Registered under the law
(if any)
S26(a)
An agreement
made without
consideration is
void unless
Made on account of natural
love
Affection between parties
standing in a near relation
to each other
13
Kepong
Prospecting Ltd &
Ors v Schmidt
S26(b)
An agreement
made without
consideration is
void unless
It is a promise to compensate
A person who has already
voluntarily done something
for the promisor
OR
Something which the
promisor was legally
compellable to do
14
Made in writing
S26(c)
A promise to
pay a debt
barred by
limitation law
Signed by the person to
be charged therewith
To pay wholly or in part a debt
of which the creditor might
have enforce payment but for
the law for the limitation of
suits
15