“Every promise is an agreement.” Examine the validity of this statement in light of the relevant provisions of the Indian Contract Act, 1872.

Question: “Every promise is an agreement.” Examine the validity of this statement in light of the relevant provisions of the Indian Contract Act, 1872. [HJS 2015]

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Answer

Section 2(e) of the Indian Contract Act defines that: “every promise and every set of promises, forming the consideration for each other, is an agreement”

This definition has two parts: First being, that every promise is an agreement, and Second that, every set of promises which forms consideration for each other is also an agreement.

The validity of the first part of section 2(e) has to be examined in the present question at hand. The phrase “forming consideration for each other”, relates to the words ‘set of promises’ and does not qualify ‘every promise’. Therefore, the provision clearly implies that a promise is an agreement even without consideration.  A promise ripens into an agreement only after an offer has been accepted by the offeree; the question of consideration arises thereafter.

Therefore, a promise which constitutes an agreement may not be legally binding between the parties because such an agreement may not be enforceable in law to form contract. In the case of Eastwood v. Kenyon (1840), 11 Ad&E 438, the question that come up before the contract was to decide whether a promise is sufficient to form a contract.

In this case, the facts were that Eastwood had been guardian and agent of Mrs Kenyon while she was a minor, and had incurred expenses in the improvement of her property: he did this voluntarily and, in order to do so, was compelled to borrow money, for which he gave a promissory note. When Mrs Kenyon came of age she assented to the transaction and after her marriage her husband promised to pay the note, which failed to do so and was sued by Eastwood upon this promise.

It was held that the moral obligation to fulfil such a promise was insufficient where the consideration was wholly past. ‘Indeed’, said Lord Thomas Denman, that ‘the doctrine of consideration would annihilate the necessity for any consideration at all, inasmuch as the mere fact of giving a promise creates a moral obligation to perform it’.

From that time onwards, every promise not in a deed has been subject to a general and uniform test of actionability. In each case, it is necessary to ask whether the promisor gets any benefit or the promisee sustains any detriment, present or future, in respect of the promise. If not, the promise is gratuitous and is not contractually binding.

Thus, the statement that every unilateral promise is an agreement, but if there is no consideration to validate it, it will remain merely an agreement and cannot be effectuated as a legally binding contract.

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Law of Contract Mains Questions and Answers 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
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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