CONSIDERATION AND
LAWFUL OBJECT OF THE
CONTRACT
MUHAMMAD JUNAID
LECTURER
DEPARTMENT OF LAW
THE UNIVERSITY OF FAISALABAD
Meaning and Definition
⚫ Consideration is one essential elements of a valid Contract.
Consideration is the benefit that each party gets from the
Contractual deal. Consideration for the promisor in a
contract is price/money/cash/reward receives from the
promisee for the promise done to him. While the
Consideration for the promisee is the item received/
obtained/acquire from the promisor which the promisor ,
promise for.
Example
⚫ A offer to sell his car on Pkr 10lacs to B.B accepts
the Offer and agreed to buy A’s….?
⚫ subject to certain Exceptions ,a Contract without
consideration is void and not enforceable by Law.
A valid agreement/contract is only enforceable
when both the parties get something and give
something. The price given to the promisor by the
promisee is called consideration.
Examples.
⚫ Contracts between organizations and employee….?
⚫ Contracts between owners and servant…..?
⚫ A father requested a teacher of maths to teach his
son as a private tutor for 2 months by paying pkr
30000 for two months……?
CONTRACT WITHOUT CONSIDERATION
⚫ A takes a lift from B to drop me to the gate No.1 of
the NUST and B agrees …?
⚫ Ali starts serving the guests in a wedding ceremony
of his relatives on his own and serves the guest for
two hours but get tired and lefts the place without
informing anybody there….?
ESSENTIALS OF A VALID CONSIDERATION
⚫Consideration must be fixed at the desire or
request of the promisor:
It means that it is the promisor who fixes the
Consideration/reward/money/ of the contract.
Example:
A offer to sell his house on pkr 1crore to the public at
large in the open market. it is general offer to the
highest bidder. So it the A the offerer, who fixes the
price or The consideration is fixed at the wish or
desire of the Promiser.
Consideration
⚫ Consideration has to be moved from
promisee or any other person on his/her
behalf
⚫ When price is fixed by the promisor, than price has
to be given by the promisee or his/her agent to the
promisor,provided the offeror has no objection.
Consideration Need not to be Adequate
⚫ This mean that It is not necessary that consideration
is always according to market value to the item
offered….Law only demands that there must be a
consideration. Law does not insist on the adequacy
of consideration.
Consideration Must be for possible events
⚫It is also Important that consideration must be for
those promises or contract which is physically
possible and [Link] the Consideration is for those
contracts which are not physically possible are not
valid Consideration.
⚫For example:
A offers B that I will give you 10 lacs rupees if you
disappear Mr C….is It possible…..???
Example No.2
⚫ A promise to put life in dead body of B father, if B
agrees to give me pkr 2crore,B accepts the offer …is
not a valid [Link] consideration offer for
this agreement is not valid,as this contract is not
possible.
Legally impossible
⚫ Legally impossible means all agreements and their
considerations which can not be legally enforceable
by law are not valid considerations.
⚫ A offer 2lacs rupees to B,if B shoots C……is it legally
possible…?? Is the Consideration in this case is a
valid Consideration…..?
Example
⚫ A and B agrees to theft in B house….and later on will
sell the goods stolen and will distribute the money in
equal shares……?
Here the consideration is the output of
theft………which is not a valid consideration and this
agreement and consideration is legally impossible to
be enforceable by law.
Consideration should be certain
⚫ Consideration must be clear and certain it should
not be vague which creates confusion in the mind of
the parties.
For Example:
⚫ Rizwan offer a job to haroon as a clerk with a
monthly pay of reasonable amount…..???
Kind of Consideration
⚫ Consideration is divided in three kinds
⚫ Past Consideration
⚫ Present Consideration
⚫ Future Consideration
PAST CONSIDERATION
⚫ It is a consideration for any voluntarily work done in
past without being asked to do by the other party.
Basically it is one side act without any promise for
return or consideration. The person doing an act
voluntarily can not bind the other party for
consideration and he has no remedy in the court of
Law. But if the subsequently a promise is made by
the offeree to pay compensation to the offeror for
the past act..the consideration is considered as a
good consideration and binding upon both the
parties.
Example
⚫A lost pet cat was found by the finder Z who was a
servant of a next door neighbor and hand over the
cat to B….without any consideration.
“Thank You very was said to the finder Z” by B.
Next day B thought let give some reward to Mr.Z in
the form of 5000 thousand rupees cash B promises
Z for reward ,now this pkr 5000 is a consideration
for the past act done voluntarily and Z can make B
binding for the promise done to him.
Present Consideration
⚫ It is the consideration which is given at the same
time when the contract is made.
⚫ It is the consideration given simultaneously by one
party to another party at the time of contract.
Example
⚫ A buy and car on cash from the showroom B and
pays the amount on the spot is the present
consideration.
Future Consideration
⚫ When the consideration is given at later date after
making the contract it will be called future
consideration.
Future Consideration is further divided into
two types
⚫ Excuted Consideration
⚫ Executing Consideration
EXECUTED CONSIDERATION
⚫ When one of the parties does accomplish his part of
the consideration leaving the liability outstanding
on the other party, the other party has yet to do his
part of consideration to complete the contract is
known as executed consideration.
Example
⚫ A sells his car to B on agreed amount of 2o lacs
Pakistani Rupees. A handover the delivery of car to
B along with the documents B has paid 19lacs on
spot and for 1lac remaining amount requested for
one day time….is a form of executed Consideration.
Executing Consideration
⚫ When both the parties has outstanding liabilities to
each other is known as Executing Consideration.
Example
⚫ A the House Building Contractor accept the offer of
B to construct one kanal house for B, Contract was
signed between both the parties. it was decided
between the parties that the payment will be paid in
installment in an agreed manner between the
parties……is a form of Executing Contract.
EXCEPTIONS TO CONSIDERATION
⚫ The general Rule is that an agreement without
Consideration is void (section 25). However
Contract Act contains certain exceptions where the
contract may be made without consideration and are
valid Contract and enforceable in the court of Law.
Agreement made out of love and affection
⚫ An agreement which is made out of love and
affection between the parties and without
consideration are valid agreement and enforceable
by law.
⚫ Mostly parties are in a very near relationship to each
other.
Examples/Gifts deeds.
⚫Gift made out by the father to his son/daughter/wife
Before entering to the agreements out of love and
affection following conditions must be fulfill.
⚫The contract must be in writing
⚫The contract is registered under the registration act
1908.
⚫The contract is made on the account of love and
affection.
⚫There is a near and dear relation between the parties.
There is no consideration for voluntary services
⚫ If any services rendered voluntarily there is no
consideration for it but if later on the promise is
made to give some reward to the promisee .the
contract will be enforceable.
Example
⚫A lost pet cat was found by the finder Z who was a
servant of a next door neighbor and hand over the
cat to B….without any consideration.
“Thank You very was said to the finder Z” by B.
Next day B thought let give some reward to Mr.Z in
the form of 5000 thousand rupees cash B promises
Z for reward ,now this pkr 5000 is a consideration
for the past act done voluntarily and Z can make B
binding for the promise done to him.
Agreement to pay a time barred Debt
⚫ A advances loan of pkr 1000 to B and the B has to
give it back within six months with 10 percent
increase on top off the principle amount. if B does
not give back A money with six month A has one
year to go to the court of law to file a suit to get back
his debt. It is usually written in the contract. Now A
does not go to the court of Law to enforce his right
to get back the debt amount from B within a year.
Later on he can not claim that money from B it is
time barred Debt. The time to enforce the right is
expired in this case. A has no remedy anymore.
⚫ Now if B in the above case after the time barred debt
agrees to A that ok I am willing to give you, your
debt, although it is a time barred debt..than B is
liable to A and contract shall be enforceable..in the
court of law.
Conditions for time barred debt to be enforceable
⚫ It must be time barred
⚫ The second agreement made after the time barred
agreement, shall be in writing and signed by both
promisor and promisee and two witnesses.
⚫ The promisor expressly acknowledges the time
barred debt to be paid to the promisee.
Agreement of donation and charity
⚫ There is no consideration in the agreement to
donation and charity. it is just for the sake of Allah
to get rewards from Allah almighty. these contract
has no consideration.
⚫ As a general Rule agreement of donations are not
enforceable by law. But only in one condition it is
enforceable that is “ if the promisee/acceptor
believing on the promise of the promisor
make further agreement with third party and
get losses the promisee is entitled to recover
it from the promisor ”
For example
⚫ A promise B that A will donate pkr 2lacs to B a
charity for the old age people ….later on A refuses
to pay the money …B cannot enforce this
contract…because of lack of consideration. But the
same contract can be enforceable if B believing on
the words of A makes an agreement with Z for the
clothes of pkr 1lacs, B suffered losses as B has paid
from his own pocket believing on the words of A. A
is liable to pay the losses suffered by B.
LAWFUL OBJECT OF THE CONTRACT
⚫ Lawful mean legal enforceable by law
⚫ Object means the purpose of the contract.
⚫ Contract means all those agreements enforceable by
Law.
Lawful Object
⚫ The object of the contract must be legal and illegal
otherwise the whole contract will be turned into the
void contract.
⚫ A rent a house from B on PKR 40000…it is legal but
if the same house uses as a rest house for terrorist is
illegal and turned the whole agreement null and
void.
⚫ The object is illegal in the following situation.
If the object is forbidden by Law
⚫When the object of the contract is expressly
forbidden by Law which is illegal by law. These
objects of the contracts are forbidden by law and
punishable under the criminal Law or Pakistan
Penal Code.
For Example: two parties make a contract for theft,
Assault,battery,robbery etc
If the Court regards the object of the agreement as
immoral
If the object of the contract is immoral, it can not be
enforceable under Law, it is illegal and void.
For example:
A makes and agreement with B, a married women to
kill his husband C and marry A for the amount of
pkr 2 lac is an agreement against the morality and
ethics. Now if B kills his husband, and A refused to
give money to A OR refused to Marry A, she can not
any thing under Law,although both of them will be
proceeded under criminal law for the murder of C
If the Court regard the Object Against the Public
Policy
⚫ An agreement which is made to effect the society or
community at large is void and illegal.
⚫ A makes an agreement with B the eye witness of a
murder case to give false statement in the court of
Law for a handsome amount of pkr 20 lacs is against
the society at large and void [Link] the false
statement is given in the court of Law by B,B cannot
enforce A to pay me the 20 lacs as the object is
illegal and void.
DOCTRINE OF PRIVITY OF CONTRACT
⚫ Privity of contract means relationship existing
between the parties who have entered into
agreement. There are two consequences of the
doctrine of privity of contract.
⚫ A person who is not a party to a contract can not sue
upon that contract even if that contract is for his
benefit and he provided the benefits.
Example
⚫ A offer to sell his shop on pkr 20lacs and B agrees to
buy it for C, C is the real brother of A,but both are
not on good terms with each others, so the
consideration/money basically belongs to [Link] on
A refuses to sell his house on B, and C sues for the
performance of the contract ……??
⚫ What if B Sues A for the performance of the
contract..?
Privity of Contract
⚫ Privity of Contract means the parties to the contract
has the rights and duties against each other and only
the parties to the contract can sue against each
others not the stranger or third party to the contract.
⚫ There are Certain Exceptions to the Doctrine of
Privity.
⚫ Creation of Trust
⚫ Principal and Agent relation
