Consideration | 'A', an old lady, granted an estate to her daughter 'B', with the condition that 'B' should pay an annuity of Rs. 5000/- to A’s brother, 'C'…. 'C' sues 'B' for breach of contract. Decide giving reasons. Also, refer to decided cases.

Question: Consideration | ‘A’, an old lady, granted an estate to her daughter ‘B’, with the condition that ‘B’ should pay an annuity of Rs. 5000/- to A’s brother, ‘C’.

On the same day, ‘B’ made a promise vis-a-vis an agreement with her uncle ‘C’ that she would pay the annuity as directed by her mother, ‘A’ Later ‘B’ refused to pay the annuity on the ground that her uncle ‘C’ had not given any consideration, he cannot claim the money as a matter of right. ‘C’ sues ‘B’ for breach of contract. Decide giving reasons. Also, refer to decided cases. [HPJS 2018]

Find the answer to the mains question only on Legal Bites. [Consideration | ‘A’, an old lady, granted an estate to her daughter ‘B’, with the condition that ‘B’ should pay an annuity of Rs. 5000/- to A’s brother, ‘C’…. ‘C’ sues ‘B’ for breach of contract. Decide giving reasons. Also, refer to decided cases.]

Answer

Section 2(d) in The Indian Contract Act, 1872 defines Consideration as: “When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”

Here, in view of the clear language used in defining consideration in Section 2 (d), it is not necessary that consideration should be furnished by the promisee. A promise is enforceable if there is some consideration for it and it is quite immaterial whether it moves from the promisee or any other person. The leading authority is the decision of The Madras High Court in Chinnaya v. Ramayya [ILR (1876-82) 4 Mad 137] from which the facts of the present case are borrowed.

In this case, an old lady, by deed of gift, made over certain landed property to the defendant, her daughter. By the terms of the deed, which was registered, it was stipulated that an annuity of Rs. 653/- should be paid every year to the plaintiff, who was the sister of the old woman. The defendant on the same day executed in the plaintiff’s favor an Iqrarnama (agreement) promising to give effect to the stipulation. The annuity was, however, not paid and the plaintiff sued to recover it. It was clear that the only consideration for the defendant’s promise to pay the annuity was the gift of certain lands by the old woman to the defendant.

The defendant, therefore, tried to defend herself on the ground that the promisee (the plaintiff) had furnished no consideration. Briefly, the whole situation was this: the defendant’s promise was given to the plaintiff, but consideration was furnished by the plaintiff’s sister. The court could have easily allowed the plaintiff to recover the annuity, as consideration given by “any other person” is equally effective. The court reached the same result but on a somewhat different ground.

In the present case also it appeared that the plaintiff was already receiving from her sister an annuity of like amount out of the estate and when the estate was handed over to the defendant it was stipulated that the payment to the plaintiff should be continued and she promised accordingly. That means that the failure to keep the promise would have deprived the plaintiff of an amount that she was already receiving and it is a legal commonplace that if a promise causes some loss to the promisee, that is sufficient consideration for the promise. Thus the plaintiff had given consideration.

Justice Kindersley also came to the same conclusion, but on a different ground. According to him the deed of gift and the defendant’s promise to pay the annuity were executed simultaneously and, therefore, they should be regarded as one transaction and there was sufficient consideration for that transaction.

Thus, it is clear that there was sufficient consideration in the present case and it is also well settled that it is not necessary that consideration should be furnished by the promisee. A promise is enforceable if there is some consideration for it and it is quite immaterial whether it moves from the promisee or any other person. So, C’s right shall be upheld to receive the money as a matter of right. He should be allowed to enforce the agreement in his personal capacity, although he was not a party to it

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X