Business Laws
The Indian Contract Act, 1872
5% weightage

Consideration

Complete study guide with 8 practice questions, detailed explanations, and expert solutions for Consideration in CA Foundation Business Laws.

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Study Notes: Consideration

Free study material for CA Foundation Business LawsThe Indian Contract Act, 1872

Consideration, defined in Section 2(d), is something of value given by one party to another in exchange for their promise/act. Every contract requires consideration (except gratuitous contracts and deeds). Key principles: (1) Consideration must have value in law (not necessarily monetary); (2) Consideration must move from promisee; (3) Consideration may be past, present, or future; (4) Consideration need not be adequate but must be real. Types: Executory (future performance), Executed (past performance), Valuable (tangible/intangible worth). What constitutes consideration: Money, goods, services, forbearance (not doing something), marriage promise. Past consideration generally insufficient unless parties agreed it was consideration. Case law: Carlill v. Carbolic establishes consideration must be real. Inadequacy of consideration: Courts generally don't examine whether consideration is fair, only whether it exists. For accountants, engagement fees represent consideration; clients' undertaking to provide access is consideration from their side. Exam tip: Identify what each party gives; show it has value in law; apply exceptions only when explicitly stated.

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