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Agreement without Consideration (S.25)

Usually without consideration a contract is not valid, but there are exceptions too.

These are the exceptions:

1. Case of natural love and affection: (S.25(1)) If an agreement is made without consideration, it can be valid if

a. Parties are very closely related

b. Due to love and affection

c. Registered

d. In writing

Example: (Venkataswamy Vs Rangaswamy) In love and affection the elder brother, promised to clear the debts of his younger brother. The agreement was in writing and it was registered. It was held by the court that the elder one was liable to the creditors.

2. Past voluntary service: (S.25(2)) A promise to compensate wholly or in part a person who has already voluntarily done some thing for the promisor is enforceable. In other words a promise to pay for a past voluntary service is binding.

Example: A finds B’s book and gives it to her and B promises to pay A Rs. 100. In so doing, there is a valid contract in such cases, although A’s act was voluntary.

3. Payment of a time-barred debt: (S.25(3)) A promise to pay a time barred debt is enforceable. The promise should be in writing. It should be signed by the promisor or by his agent generally or specially authorized in that behalf. The promise may be to pay the whole or any part of the debt. The debt must be such of which the creditor might have enforced payment but for the law for the limitation of suits. As per Balkrishna v. Jayshankar, promise to pay time barred debt has to be an express promise to pay, and not merely an implied promise.

4. Gift actually made: (S.25 Explanation 1) For validity of a gift, which is not an agreement, does not require a consideration. The provision as to consideration does not affect, as between donor and the donee, the validity of any gift which has actually been made.

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