Fundamentals of Business Laws and Business Communication · Consideration and Legality of Object

Adequacy of Consideration and Other Rules of Consideration

Updated 10 October 2026 · Fact-checked

Consideration need not be adequate: courts ask only whether something of value was given, not whether it matches the promise. It must be real and lawful. Performing an existing legal duty is generally not good consideration. Past consideration is valid in India if given at the promisor's desire. Executed means act done; executory means promise to do.

Understand Adequacy of Consideration and Other Rules

Consideration is the price one party pays for the other party's promise. Under the Indian Contract Act, 1872, it can be an act, an abstinence or a promise, done at the desire of the promisor.

The first rule here is that consideration need not be adequate. The court does not weigh whether the price was fair. If you freely agree to sell your bike worth ₹50,000 for ₹30,000, the ₹30,000 is still valid consideration. But it must be real, not illusory or impossible. Inadequacy can still matter as evidence: a very low price may suggest that consent was not free, for example due to fraud or undue influence.

The second rule is about existing duty. If you only do what the law already requires you to do, you give nothing new. So a promise to pay a witness for attending court under summons has no consideration from the witness. Doing something extra, beyond the duty, can be good consideration.

The third rule is about time. Consideration can be past, present (executed) or future (executory). The Indian definition says 'has done or abstained from doing, or does or abstains, or promises'. So past consideration is allowed in India, if the act was done at the promisor's desire. This differs from English law. A voluntary act done without the promisor's request is not valid consideration under Section 2(d). However, there is an exception: under Section 25(2), a later express promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor is enforceable even without consideration.

Executed consideration means the act is already done in exchange for a promise, as in a reward offer when the finder returns the lost item. Executory consideration means a promise exchanged for a promise, to be performed later, as when you order goods and promise to pay on delivery.

In Durga Prasad v Baldeo (Allahabad High Court, 1880), the plaintiff built shops in a market at the defendant's request, and the defendant promised him commission on the goods sold in those shops. The promise was held enforceable because the shops were built at the defendant's desire. It is the standard example of a past service done at the promisor's request supporting a later promise.

Key formulas to remember

Adequacy rule: Consideration must be real and lawful, but need not be adequate; Court does not measure the value. Illusory or unlawful consideration fails.
Existing duty rule: Performing an existing legal duty ≠ valid consideration; Doing more than the duty can be valid consideration.
Past consideration (Indian law): Act done earlier at the promisor's desire = valid consideration; The desire of the promisor is essential. A purely voluntary past act is not valid consideration under Section 2(d), but see the Section 25(2) exception.
Voluntary past act and later promise (Section 25(2)): Voluntary past act for the promisor + later express promise to compensate = enforceable without consideration; An exception to 'no consideration, no contract'. The act must have been done voluntarily for the promisor, and the promise must be an express promise to compensate it, wholly or in part.
Executed consideration: Act for a promise (or act for an act); One side has already performed. Example: a reward for returning a lost bag.
Executory consideration: Promise for a promise; Both sides will perform later. Also called future consideration.

How to solve Adequacy of Consideration and Other Rules questions

Use this method for any question on adequacy, existing duty, or the types of consideration.

1Identify the promise and what the other party gave in return.
2Ask whether the thing given has some value in the eyes of law. If yes and the issue is only that it is small, apply the rule that consideration need not be adequate.
3Check whether the giver was already bound by law or by an existing contract to do the same thing. If so, it is not fresh consideration unless something extra is given.
4Check the timing: was the act done before the promise, at the promisor's request? If yes, it is valid past consideration in India.
5If the past act was voluntary, check whether the promisor later made an express promise to compensate it. If so, Section 25(2) makes that promise enforceable.
6Classify it: act done already = executed; promise for promise = executory.
7Check that the consideration is lawful and consent was free.
8State the conclusion in one line, linked to the rule.

Quickest way: Four-word scan: Value, Duty, Desire, Time

When to use it: Use for MCQs with a short fact situation and four options.

Value: if the only complaint is that the price is low, the answer is usually that the contract stands.
Duty: if someone only does what law or an existing contract demands, say no consideration.
Desire: for past acts, look for words like 'at his request'. If present, valid past consideration. If the act was voluntary, it is not valid consideration, but check for a later express promise to compensate, which is enforceable under Section 25(2).
Time: act already done is executed; promise for promise is executory.
Eliminate options using English-law ideas such as 'past consideration is never valid'. That is wrong for India.

Common mistakes in Adequacy of Consideration and Other Rules

Saying a contract is void because the price is too low.
Students mix adequacy with fairness.
Fix: Remember the court checks existence of value, not its size. Only check for fraud, coercion or undue influence.
Treating past consideration as invalid in India.
English law rule is learned and applied.
Fix: Indian definition covers 'has done'. Past act at promisor's desire is valid.
Accepting any past voluntary act as consideration, or rejecting a later promise for it outright.
Students stop at 'past is valid' or at 'voluntary is invalid'.
Fix: Look for the promisor's request. If there was none, the act is not valid consideration, but a later express promise to compensate it is enforceable under Section 25(2).
Calling a police officer's or witness's duty good consideration for a reward.
Students forget the existing duty rule.
Fix: Ask whether the person was legally bound. If yes, no fresh consideration.
Confusing executed and executory consideration.
The names sound alike.
Fix: Executed means 'done'. Executory means 'to be done'. Promise for promise is always executory.

Worked examples

Example 1

Ravi sells his scooter worth ₹40,000 to Meena for ₹25,000 of his own free will. Later he refuses to deliver, saying the price was inadequate. Is the contract enforceable?

Show the solution

The promise is to deliver the scooter. In return Meena promised ₹25,000.
The ₹25,000 has real value, though less than the market price.
Consideration need not be adequate.
Ravi's consent was free, so there is no ground to avoid the contract.

Answer: Yes, the contract is enforceable. Inadequacy of consideration does not make it invalid when consent is free.

Example 2

Sunil saw Anita slip into a river and, without being asked, pulled her out and saved her from drowning. Afterwards Anita expressly promised to pay him ₹10,000 to compensate him for what he had done. Sunil sues for it. Is the promise enforceable under Indian law?

Show the solution

Sunil's act came before the promise, so it is past.
Anita did not request the act. It was voluntary, so it is not valid consideration under Section 2(d).
The act was done for Anita herself, the promisor.
Anita later made an express promise to compensate Sunil for what he had voluntarily done for her.
Section 25(2) makes such a promise enforceable without consideration, as an exception to 'no consideration, no contract'.

Answer: Yes, Anita's promise is enforceable under Section 25(2), even though Sunil's voluntary act is not valid consideration under Section 2(d).

Exam tips

Expect MCQs on the rule 'consideration need not be adequate'. Pick the option that upholds the contract when consent is free.
Watch for 'at his request' in past consideration questions. It decides whether the act is valid past consideration.
If the past act was voluntary but the promisor later expressly promised to compensate, remember Section 25(2): the promise is enforceable.
For existing duty, look for public servants, witnesses or an existing contract.
Do not lose marks on definitions: executed means act done, executory means promise for promise.
If Durga Prasad v Baldeo appears, recall the facts: the plaintiff built shops in a market at the defendant's request, and the defendant's promise of commission on goods sold there was held enforceable.

Practice questions from Consideration and Legality of Object

Adequacy of Consideration and Other Rules: frequently asked questions

Why does the law say consideration need not be adequate?

Courts respect the freedom of parties to fix their own bargain. The court checks only that something of value was exchanged. A low price may matter only if it shows fraud, coercion or undue influence.

Is past consideration valid in India?

Yes, if the act was done at the desire of the promisor. The Indian definition includes 'has done or abstained from doing'. A purely voluntary act without request is not valid consideration under Section 2(d), but a later express promise to compensate it is enforceable under Section 25(2).

How do I tell executed from executory consideration?

If one party has already done the act and the other has only promised, it is executed. If both sides exchange promises to be performed later, it is executory. Think 'done' versus 'to be done'.

Why is an existing legal duty not good consideration?

The promisee gives nothing new because the law already requires it. Doing something beyond the duty can be valid consideration.