b.law 4.pptx
- 1. UNIT 1 INTRODUCTION TO BUSINESS LAWS ( CONSIDERATION)
- 2. CONSIDERATION When a party to an agreement promises to something, he must get something in return. This getting of something in return is called consideration. This is called in Latin as “Quid pro Quo” an agreement without consideration is called naked or bare promise.
- 3. ESSENTIALS OF A VALID CONSIDERATION 1. consideration at the desire of the promisor 2. consideration by the promisee or any other person 3. consideration may be past , present, or future. 4. consideration need not be adequate 5. consideration must be real 6. consideration must be lawful 7.consideration must be something which the promisor is not already bound to do.
- 4. CONSIDERATION • Consideration must be real : • Consideration must be real and not illusory. • It must be competent. If it is physically impossible, vague or legally impossible, the contract cannot be enforced • consideration must be lawful : An agreement is void if it is based on unlawful object. An agreement is considered unlawful if :a) it is forbidden by law) is of a nature that if permitted it would defeat the provisions of any law) is fraudulent) involves or implies injury to the person or property of another) the court regards it as immoral or opposed to public property It must be something which the promisor is not already bound to do : A promise to do what one is already bound to do, either by general law or under an existing contract, is not a good consideration for a new promise.
- 5. Sec 11 of ICA deals with the competency of parties. The term capacity to contract means the competency or qualification of the parties to enter into a valid contract. Acc to sec 11, the following persons are competent to enter into the contract. 1. Major 2. Sound minded persons 3. The persons who are not disqualified by any law of the land.
- 6. MINORS According to sec 11 of ICA a minor is an incompetent person to enter into a contract. DEFINITION: sec 3 of Indian majority act 1875 defines a minor as “a minor is one who has not completed the age of his or her 18 years” SPECIAL CASES: In the following cases a person continuous to be minor until he completed the age of 21 years. 1. Where a guardian is appointed to look after the minor & his property under the guardian and wards act 1890 2. where the superintendence of minor property is assumed by a court acts as a guardian
- 7. ⦁ An agreement by or with minor is void ⦁ No ratification ⦁ Minor can be promise or beneficiary ⦁ No estoppel against minor ⦁ No specific performance ⦁ Liability for torts ⦁ No insolvency ⦁ Minor as a partner ⦁ Minor as an agent ⦁ Minor cannot bind parent or guardian ⦁ Joint contact by minor or adult ⦁ Minors liability for necessaries
- 8. NO CONSIDERATION NO CONTRACT : EXCEPTION Natural love and affection : A written or registered agreement based on natural love and affection between the parties standing in near relation to each other is enforceable even without consideration. Compensation for services rendered : in order that a promise to pay for the past voluntary services be binding, the following essentials must exist) • the act must be done voluntarily) • for the promisor or it must be something which was the legal obligation of the promisor) • the promisor must be in the existence at the time when the act was done) • the promisor must agree now to compensate the promisee
- 9. ADEQUACY OF CONSIDERATION • A Court will not question the fairness of the bargain if legally sufficient. Law does not protect a person for entering into an unwise contract. In extreme cases, a court may find that a party lacks legal capacity or that contract was unconscionable.
- 10. ELEMENTS OF CONSIDERATION • Consideration must be given in order to make a contract legally binding Must be something of value to be a “bargained for exchange” • Consideration must induce the party to incur a legal detriment and/or provide a legal benefit to the other party sufficient to induce that party to commit itself. The adequacy of the consideration is not usually taken into account. • Legally sufficient consideration can be: Promising to do something that the promisor has no prior legal duty to do. Performing an action that the promisor is not otherwise obligated to undertake. Refraining from exercising a legal right which the promisor is entitled to exercise.