Fundamentals of Business Laws and Business Communication · Void and Voidable Agreements, No Consideration No Contract

No Consideration No Contract and Its Exceptions

Updated 10 October 2026 · Fact-checked

Under the Indian Contract Act, 1872, an agreement without consideration is void. This is the rule 'no consideration, no contract'. Section 25 lists three exceptions: a written, registered agreement from natural love and affection, compensation for past voluntary service, and a written promise to pay a time-barred debt. Completed gifts (Explanation 1) and agency (Section 185) are separate points.

Understand No Consideration No Contract and Its Exceptions

Consideration means something in return. If you promise to give me your bike, and I give nothing in return, your promise is a gratuitous promise. The law does not enforce it. That is the rule: an agreement made without consideration is void.

Why does the law insist on this? A contract is a bargain. Each side gives and gets something. A bare promise to give a gift is not a bargain, so a court will not force you to keep it.

But the law makes some exceptions where a promise is fair and serious enough to enforce even without consideration. Section 25 of the Indian Contract Act, 1872 covers the main ones. The exceptions are:

Natural love and affection: The agreement must be in writing, registered under the law on registration of documents, and made between parties standing in a near relationship. Example: a father promises in a registered written deed to give his son ₹5,00,000 out of love.
Compensation for past voluntary service: A person promises to compensate someone who has already voluntarily done something for the promisor. The same applies where the person did something which the promisor was legally compellable to do. Example: Ravi voluntarily saves Meena's purse, and Meena later promises him ₹500 for it. Another example: Ravi voluntarily pays a sum that Meena was legally bound to pay, and Meena later promises to repay him. The Section 25 test is that the act was done voluntarily for the promisor. If Ravi had acted at Meena's request, it would be a past consideration under Section 2(d) instead. In both examples the promisor must have been in existence and competent to contract when the act was done.
Promise to pay a time-barred debt: A debt is barred by limitation, but the debtor makes a written promise, signed by him or his authorised agent, to pay it in whole or in part.

Other points are also tested. Under Section 2(d), consideration can be past, present or future, so a past consideration (an act done earlier at the promisor's desire) is valid in India. Section 185 says no consideration is needed to create an agency. Completed gifts are not affected, because the explanation to Section 25 says that the rule does not affect the validity of a gift actually made.

Two more points can appear in questions. A gratuitous bailment is valid without consideration, but it is not one of the Section 25 exceptions. Then there is the charity subscription case, Kedar Nath v Gorie Mohamed (1886). There the promise was enforced because the promisee had incurred a liability in reliance on it. This is an illustration of reliance, not a general rule. It applies only where the promisee incurred a liability in reliance on the promise. It comes from case law and is not an exception under Section 25. Read the facts carefully.

Remember the key difference. A gratuitous promise is a one-sided promise with nothing given in return, and is not enforceable (unless an exception applies). A contract has consideration from both sides and is enforceable by law.

Key formulas to remember

General rule (Section 25): Agreement without consideration = void; Applies unless one of the exceptions in Section 25 applies.
Exception 1: Natural love and affection: Written + Registered + Near relatives + Natural love and affection = valid; All four conditions must be met. Missing any one makes the agreement void.
Exception 2: Past voluntary service: Promise to compensate a person who has already voluntarily done something for the promisor, or something the promisor was legally compellable to do = valid; The act must have been done voluntarily for the promisor (or be something the promisor was legally compellable to do). The promisor must have been in existence and competent to contract when it was done. If the act was done at the promisor's request, it is a past consideration under Section 2(d) instead. The promise may be written or oral.
Exception 3: Time-barred debt: Written + Signed by debtor (or agent) + Promise to pay a debt barred by limitation = valid; The promise must be in writing and signed. An oral promise does not count.
Completed gift: Gift actually made = no consideration needed; The rule 'no consideration, no contract' does not apply to a gift already delivered. A mere promise to gift is not enforceable.
Agency: No consideration is needed to create an agency (Section 185); Applies only to creating the agency, not to other agreements.

How to solve No Consideration No Contract and Its Exceptions questions

Use this order for any scenario or MCQ on the topic. It takes under a minute once you practise.

1Read the facts and ask: did each side give or promise something in return? If yes, consideration exists and the general rule is not an issue.
2If one side gives nothing, treat it as a gratuitous promise. Say it is void under the general rule.
3Check whether the promise is a gift already completed. If the gift was delivered, it stands.
4Test each Section 25 exception one by one: natural love and affection, past voluntary service, time-barred debt.
5For natural love and affection, tick four conditions: in writing, registered, near relatives, and love and affection as the reason.
6For a time-barred debt, check that the promise is in writing and signed. For past service, check that the act was voluntary and done for the promisor, or was something the promisor was legally compellable to do.
7If the facts match an exception, the agreement is valid. If any condition fails, the agreement is void.
8State the answer clearly with the reason in one line.

Quickest way: Three-question filter

When to use it: Use it for MCQs where you have about a minute per question.

Question 1: Is there something given in return? If yes, it is a normal contract and the question is about something else.
Question 2: Is it a completed gift? If yes, valid.
Question 3: Does it match one exception? Look for the keywords: 'registered' (love and affection), 'voluntarily' (past service), 'barred by limitation' or 'time-barred' (debt). If the keyword is missing, usually the answer is void.
Watch for 'oral' or 'unregistered' in options. These usually point to the wrong choice.

Common mistakes in No Consideration No Contract and Its Exceptions

Saying a father's promise to his son is always valid because of love and affection.
Students remember the exception but forget the conditions.
Fix: Check for writing and registration. Without both, the promise is void.
Accepting an oral promise to pay a time-barred debt as valid.
Students think any promise revives the debt.
Fix: The promise must be in writing and signed by the debtor or an authorised agent.
Treating a gift already given as void for lack of consideration.
Students apply the general rule without noticing that the gift is complete.
Fix: A completed gift is valid. Only a mere promise to give is unenforceable.
Confusing 'past voluntary service' with service done at the promisor's request.
Both involve past acts, so they look alike.
Fix: If the act was done at the promisor's desire or request, it is a past consideration under Section 2(d), and the later promise is supported by it. If it was done voluntarily without request, use the Section 25 exception. Read the facts for 'without asking' or 'at his request'.
Saying a gratuitous promise is illegal.
Students mix up 'void' with 'illegal'.
Fix: It is only void, meaning not enforceable by law. It is not a crime and carries no penalty.

Worked examples

Example 1

Anil promises orally to give his brother Sunil ₹2,00,000 out of natural love and affection. Sunil sues to recover the amount. Will he succeed?

Show the solution

Step 1: Sunil gave nothing in return, so it is a gratuitous promise.
Step 2: The natural love and affection exception needs a written and registered agreement between near relatives.
Step 3: The promise was only oral and unregistered. Two conditions fail.
Step 4: So the exception does not apply and the general rule makes the agreement void.

Answer: Sunil will not succeed. The agreement is void for lack of consideration.

Example 2

Rohan owes Mehta ₹10,000, but the debt became time-barred under the law of limitation. Rohan signs a written promise to pay ₹6,000 of it. Is Rohan bound?

Show the solution

Step 1: The original debt is time-barred, so Mehta could not sue on it.
Step 2: Section 25 allows a written promise, signed by the debtor, to pay a time-barred debt, wholly or in part.
Step 3: Rohan's promise is in writing and signed. It covers part of the debt, which is allowed.
Step 4: The promise is valid without fresh consideration. The promise is limited to the ₹6,000 he promised.

Answer: Yes. Rohan is bound to pay ₹6,000 under the Section 25 exception.

Exam tips

Look for keywords in the question: 'registered', 'in writing', 'voluntarily', 'time-barred'. Each matches one exception.
In MCQs, an option saying 'valid' without any writing or registration is usually a trap.
Remember that a completed gift needs no consideration, but a promise to give a gift does.
Be able to state the difference between a gratuitous promise and a contract in one line.
Learn the exceptions as a short list of three, plus gifts and agency, so you can eliminate options quickly.

Practice questions from Void and Voidable Agreements, No Consideration No Contract

No Consideration No Contract and Its Exceptions: frequently asked questions

What is the rule of no consideration, no contract?

It means an agreement made without consideration is void and cannot be enforced in court. Consideration must be given by both sides. Section 25 of the Indian Contract Act, 1872 contains the exceptions.

What are the exceptions to no consideration, no contract?

Section 25 lists three exceptions: a written and registered agreement out of natural love and affection between near relatives, a promise to compensate past voluntary service, and a written signed promise to pay a time-barred debt. Separately, a completed gift is not affected (Explanation 1 to Section 25), and no consideration is needed to create an agency (Section 185).

What is the difference between a gratuitous promise and a contract?

A gratuitous promise is made without anything given in return, so it is generally not enforceable. A contract has consideration from both parties and can be enforced by law. A gratuitous promise becomes enforceable only if an exception applies.

Does a promise to pay a time-barred debt need to be in writing?

Yes. Under Section 25, the promise must be in writing and signed by the debtor or his authorised agent. An oral promise is not enough.