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Theories of Contract

Theories of contract law provide frameworks that help in understanding the


underlying principles that govern contractual relationships, the obligations that arise
from these relationships, and how compensation is determined. While the Contract
Act does not explicitly state compensation amounts, these theories offer insights into
the philosophical basis for contractual obligations and guide courts in resolving
disputes over compensation. Here’s an overview of key contract theories, each
explaining different foundational principles, obligations, and rights in contracts.

1. Contract Theory or Promissory Theory

The promissory theory views contracts as self-imposed promises, essential for


creating binding agreements between parties:

• Foundation of Contracts: In this theory, contracts are essentially based on


promises, which become binding through mutual offer and acceptance. The
acceptance of an offer turns the offer into a promise, establishing the
contract's fundamental structure.

• Self-Imposed Obligations: Parties create their own obligations, which are


considered self-imposed since they arise from mutual consent. These
promises, once made, form a moral and legal basis for contractual duties.

• Legal Obligations and Enforceability: While promises are central to contract


formation, legal formalities and obligations ensure enforceability. Courts
enforce these contracts when formalities are fulfilled, holding parties
accountable to their promises.

• Example: A classic example is Carlill v. Carbolic Smoke Ball Co. (1893), where
the company’s promise in an advertisement was held enforceable because it
had the essential elements of offer, acceptance, and intention to create legal
relations.

2. Reliance Theory

The reliance theory emphasizes the role of reliance and trust in creating contractual
obligations, which may not always arise purely from mutual promises:

• Reliance-Based Obligations: This theory suggests that obligations in a contract


stem from one party’s reliance on another's promise, even if not formally
contractual.
• Inducement and Intention: A promise can result in an obligation if the other
party reasonably relies on it, leading to potential liability. Courts often assess
whether reliance existed and whether it was reasonable, determining if a
contractual obligation arises.

• Intention for Legal Obligation: Not all promises are contractual; intent is
critical. Courts test intention by examining the extent of reliance. For instance,
in Central London Property Trust Ltd. v. High Trees House Ltd. (1947), the
reliance on a landlord’s promise was key to the court’s enforcement of
equitable relief under promissory estoppel.

3. Transfer Theory

The transfer theory sees contracts as vehicles for transferring rights from one party
to another, with a focus on the contractual promise's effect on rights:

• Rights Transfer: This theory emphasizes that contracts often involve the
transfer of rights, particularly in promises to perform future acts for the
benefit of another party.

• Beneficiary’s Rights: In such contracts, the beneficiary gains a right to


performance, derived from the promisor’s transfer of rights to them. This
theory is often applicable in third-party beneficiary contracts, where rights are
created and transferred for a non-contracting party.

• Example: The case of Tweddle v. Atkinson (1861) illustrates this principle, as it


involved a promise benefiting a third party, though enforceability was denied
due to lack of consideration. The case highlights the significance of
transferring rights within contracts.

4. Utilitarian Theory

Utilitarian theory justifies contract law by arguing that it serves the welfare of society,
focusing on the overall utility contracts provide:

• Social Benefit: Contracts are viewed as tools that enhance social welfare, as
they enable predictable exchanges and mutual benefits among individuals.

• Efficiency Theory as a Subset: Efficiency theory, a subset of utilitarianism,


supports that contracts help in allocating resources optimally, promoting
economic welfare and societal progress.

• Example in Practice: Many commercial contracts, such as insurance


agreements, reflect utilitarian values by enabling individuals to protect
themselves from financial loss, thereby stabilizing society as a whole.

5. Rights-Based Theory
Rights-based theory holds that contracts arise from and are justified by individual
rights, with the law protecting these rights through enforceable agreements:

• Foundation of Individual Rights: Contracts affirm and protect individual rights,


including the freedom to enter and enforce agreements. Contract law thereby
becomes a mechanism for recognizing and upholding these rights.

• Legal Force to Rights: By enforcing agreements, contract law respects


individuals' autonomy and provides legal consequences for rights violations.
Rights-based theory thus emphasizes justice and fairness as central to
contractual obligations.

• Example: In Donoghue v. Stevenson (1932), while primarily a tort case, the


court recognized individual rights in terms of contractual duty, setting a
precedent for individual rights within contractual and quasi-contractual
obligations.

Doctrines in Contract Law

1. Doctrine of Privity of Contract

The doctrine of privity of contract limits the right to claim damages and enforce
obligations strictly to the contract’s original parties.

• Foundation of Doctrine: This principle prevents third parties from suing or


benefiting from a contract they did not create. Only direct parties to the
contract can sue or be sued on its terms.

• Exceptions to Privity: Although typically only parties can claim damages,


certain exceptions allow indirect parties some rights:

o Trusts: If a contract creates a trust, beneficiaries, even if not party to


the contract, can enforce it.

o Agency: Agents can act on behalf of principals, binding principals to


contractual obligations with third parties.

o Third-Party Insurance Claims: Insurance laws sometimes allow


beneficiaries to claim benefits despite not being party to the insurance
contract.

• Case Law: In Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. (1915), the
court reinforced that only those directly involved could enforce contractual
terms.
• Relevant Case: Donoghue v. Stevenson (1932), though a tort case, indirectly
raised questions about privity by acknowledging indirect claims for damages
when harm was caused.

2. Doctrine of Privity of Consideration

Under Indian law, privity of consideration is less stringent, as consideration may


come from a third party.

• Definition under Section 2(d): The Indian Contract Act defines consideration as
an act or abstinence that a promisor requests, whether performed by the
promisee or another. This broader scope contrasts with English law, which
requires consideration directly from the promisee.

• Types of Consideration: Consideration may be past, present, or future,


encompassing monetary and non-monetary acts, promises, or abstentions.

• Case Law: Chinnaya v. Ramayya (1882) exemplifies privity of consideration. A


donor’s agreement to pay an annuity was enforced, despite the annuity being
paid to a third party who had not directly offered consideration.

• Sufficiency of Consideration: Courts uphold consideration if it is of value to the


parties, though adequacy is irrelevant as long as parties agree it has worth.

3. Doctrine of Promissory Estoppel

Promissory estoppel prevents parties from reneging on promises if others have


relied on them, even without formal consideration.

• Establishing Estoppel: The doctrine requires a clear promise, reliance on the


promise, and resulting detriment to the relying party.

• Shield, Not Sword: Promissory estoppel is traditionally used as a defense (a


shield) rather than a cause of action (a sword). This means it can prevent a
party from enforcing rights they previously waived but is not used to create
new obligations.

• Case Law: Central London Property Trust Ltd. v. High Trees House Ltd. (1947)
demonstrated promissory estoppel. The landlord’s promise of reduced rent
during wartime was enforceable when the tenant relied on it.

• Development in Indian Law: Indian courts have adopted promissory estoppel,


broadening its use. In Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar
Pradesh (1979), the Supreme Court held that the government could not retract
a tax exemption promise due to the company’s reliance.

4. Doctrine of Restitution
Section 65 of the Indian Contract Act mandates returning any benefits when a
contract is declared void.

• Objective of Restitution: The doctrine ensures fairness by preventing unjust


enrichment, requiring parties who have benefited under a void contract to
restore that advantage.

• Types of Void Contracts: Restitution applies when:

o Void Ab Initio: Contracts invalid from the beginning due to illegality or


lack of capacity.

o Subsequently Void: Contracts initially valid but later void due to changes
in law or impossibility.

• Doctrine of Unjust Enrichment: Closely related to restitution, unjust


enrichment disallows retaining benefits without corresponding obligations.

• Case Law: In Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd.
(1943), a contract became void due to wartime restrictions, and the court
ordered the return of advance payments, reinforcing the doctrine of restitution.

5. Doctrine of Absolute Acceptance

This doctrine under Section 7 of the Indian Contract Act requires unconditional
acceptance to form a contract.

• Requirements for Valid Acceptance:

o Absolute and Unqualified: Acceptance must mirror the offer terms


exactly, with no modifications.

o Reasonable Manner: Acceptance must be communicated reasonably,


and if the offer prescribes a method, that method should be followed.

• Conditional Acceptance: Conditional acceptance is not binding as it suggests a


counter-offer, not consent to the original terms.

• Case Example: If a contract specifies that acceptance must be in writing,


verbal acceptance alone would not form a binding contract unless the offeror
later accepts it.

6. Doctrine of Frustration

Frustration applies when performance becomes impossible after contract formation,


nullifying the contract.

• Legal Principle: If unforeseen events fundamentally alter contract obligations


or destroy the subject matter, the contract is void.

• Conditions for Frustration: The doctrine applies only if:


o Performance was Initially Possible: The contract was feasible when
signed but later frustrated by an external event.

o Unforeseen Event: The frustrating event was unforeseen, beyond the


parties’ control, and not due to any party’s fault.

• Case Law: Taylor v. Caldwell (1863) set the precedent that destruction of the
concert hall frustrated the contract, excusing parties from obligations.

• Indian Application: Section 56 of the Indian Contract Act mirrors this doctrine,
emphasizing voidability upon subsequent impossibility.

7. Doctrine of Necessity

In certain essential cases, the doctrine of necessity allows enforcement despite


missing elements or conditions.

• Legal Grounds for Necessity: This doctrine applies when public policy,
emergency, or welfare requires enforcing an otherwise voidable or
unenforceable contract.

• Application in Emergency Situations: Contracts for essential services or


goods, such as medical care, may be enforceable despite lacking typical
requirements, as necessity prioritizes the parties’ welfare.

• Examples in Practice: Contracts where a party lacks capacity, such as a minor,


may be enforceable if made under necessity for essential goods or services
like food, shelter, or medical treatment.

Quasi-Contracts

Quasi-contracts are unique obligations imposed by law in the absence of an


actual contract. They arise when one party is unjustly enriched at the expense
of another, compelling the possessor to perform a duty of restitution. Quasi-
contracts do not involve any agreement or mutual assent, but courts enforce
them to prevent unfair enrichment and ensure justice.

Key Aspects of Quasi-Contracts

1. Definition and Nature

o Quasi-contracts are not genuine contracts but legal constructs


imposed by courts.
o They create rights and duties similar to those of an actual contract,
although there is no offer, acceptance, or intention to create legal
relations.

o Courts enforce quasi-contractual obligations to correct situations


where one party is unfairly advantaged over another without a formal
agreement.

2. Basis of Quasi-Contracts

o Quasi-contracts are based on principles of equity and fairness, not on


the intent of the parties.

o They are often described as contracts "implied in law" or "imposed by


law" to prevent unjust enrichment.

o The doctrine aims to restore the rightful owner’s position by requiring


the possessor of goods or property to return them.

3. Right of Possession and Claim by the Rightful Owner

o In quasi-contractual scenarios, the rightful owner has a claim over their


property regardless of who currently possesses it.

o The right of possession remains with the original owner and is only
considered “exhausted” once the owner reclaims the property.

o Example: If a person finds lost goods and the owner later appears to
claim them, the finder has a duty to return the goods even without a
formal contract.

4. Obligations and Duties

o Quasi-contracts impose a duty on the possessor to return the property


to the rightful owner.

o The possessor has no legal claim to retain or benefit from the property
and must respect the owner’s rights.

o This duty extends to situations where a person mistakenly receives


money or goods that do not belong to them. They are obligated to repay
or return it to the true owner.

5. Legal Provisions under Indian Contract Act

o Sections 68 to 72 of the Indian Contract Act cover quasi-contractual


obligations:
▪ Section 68: Addresses reimbursement obligations when a
person supplies necessaries to a minor or someone who cannot
contract.

▪ Section 69: Concerns cases where one person pays money for
another’s benefit, even without authorization, creating a duty of
repayment.

▪ Section 70: Covers obligations when one person lawfully does


something for another without an explicit request but expects
compensation.

▪ Section 71: Imposes duties on finders of lost goods to take


reasonable care and return them to the owner.

▪ Section 72: Addresses recovery of money paid by mistake or


under coercion, creating an obligation for the payee to return it.

6. Case Law Examples

o State of West Bengal v. B.K. Mondal & Sons (1962): The court held that
the state was liable to pay for services rendered in good faith without
an explicit contract, recognizing a quasi-contractual duty.

o Kedar Nath v. Gorie Mohammad (1886): A person who accepted money


by mistake was required to return it under quasi-contractual obligation,
establishing the duty of restitution.

7. Doctrine of Unjust Enrichment

o Quasi-contracts are grounded in the doctrine of unjust enrichment,


which prevents one party from benefiting at the expense of another
without a legal basis.

o Courts use this doctrine to mandate that any undue benefit received
without a rightful basis must be restored to the actual owner.

8. Examples in Practice

o If a bank mistakenly credits money to the wrong account, the recipient


has a quasi-contractual obligation to return the amount.

o A contractor supplying emergency repairs on another’s property


without prior agreement can expect reasonable compensation, based
on the quasi-contractual principle.
Types of Damages

In contract law, damages serve to compensate a party for losses resulting from the
breach of a contract. The primary goal is to place the injured party in the position they
would have been in had the contract been performed as intended. There are several
types of damages that courts may award, each with distinct characteristics and
purposes. The main types are liquidated, unliquidated, exemplary, and nominal
damages.

1. Liquidated Damages

Liquidated damages are predetermined sums specified within a contract, agreed


upon by the parties as a reasonable estimate of the damages that would result from
a breach. This pre-agreed amount is generally enforceable, provided it reflects a
genuine pre-estimate of the likely losses, rather than a penalty. Liquidated damages
serve the purpose of avoiding lengthy disputes over compensation by establishing a
fixed sum in advance. This mechanism is commonly found in commercial contracts
where precise monetary values for potential losses are challenging to ascertain in
real time.

For example, if a construction contractor agrees to complete a project by a specific


date, and the contract includes a liquidated damages clause, any delay would result
in the contractor paying the specified amount per day as compensation. A notable
case illustrating this is Dunlop Pneumatic Tyre Co. Ltd. v. New Garage & Motor Co.
Ltd., where the court outlined criteria for distinguishing liquidated damages from
penalties.

2. Unliquidated Damages

Unlike liquidated damages, unliquidated damages are not predetermined in the


contract. Instead, they are assessed and determined by the court after a breach
occurs, based on the actual loss suffered. The amount awarded is left to judicial
discretion and varies according to the specific circumstances of each case.
Unliquidated damages are particularly common when it is impractical to estimate
potential damages accurately in advance.

Unliquidated damages are often classified further into types like compensatory,
consequential, and incidental damages. For instance, if a business partner breaches
a contract by failing to deliver goods as promised, the aggrieved party can claim
unliquidated damages reflecting their actual financial loss. In such cases, the court
examines factors like the severity of the breach, the extent of the loss, and the
surrounding context of the contractual relationship to award an appropriate sum.

3. Exemplary (or Punitive) Damages


Exemplary damages, also known as punitive damages, are awarded not merely to
compensate the aggrieved party but to punish the breaching party for conduct
deemed especially harmful, willful, or malicious. The purpose of these damages is to
act as a deterrent, discouraging others from engaging in similar conduct. Courts tend
to award exemplary damages sparingly, primarily in cases where there is a need to
highlight and deter particularly egregious behavior.

A significant case illustrating exemplary damages is Rookes v. Barnard, where the


court held that exemplary damages could be awarded in specific situations, including
cases involving oppressive conduct by government officials, where the defendant has
profited from wrongdoing, or where expressly authorized by statute. While more
common in tort law, exemplary damages may be awarded in contract law if the breach
involves fraudulent or malicious actions that warrant punishment beyond simple
compensation.

4. Nominal Damages

Nominal damages are symbolic and awarded when a breach of contract has occurred
but has not resulted in any substantial loss or harm to the non-breaching party. They
serve to recognize that a legal right has been violated, even if no significant financial
damage has ensued. Although the amount awarded is minimal, usually a token sum,
nominal damages uphold the principle that a contractual breach merits a remedy
regardless of the actual loss.

Nominal damages often accompany other forms of damages, particularly in cases


where the court seeks to affirm a party’s rights without awarding substantial
compensation. For example, if a party breaches a contract but the non-breaching
party is able to mitigate the loss entirely, they may still claim nominal damages to
mark the contractual violation.

Key Concepts in Contract Law under Indian Contract Act, 1872

1. Contract (Section 2(h))

According to Section 2(h) of the Indian Contract Act, a contract is defined as “an
agreement enforceable by law.” For an agreement to become a contract, it must have
certain essential elements, including a valid offer, acceptance, consideration, and the
intention to create legal relations. A contract is formed when two or more parties
reach an enforceable agreement, giving rise to obligations recognized by law. If one
party breaches the contract, the other party has the legal right to seek remedies.
2. Agreement (Section 2(e))

Section 2(e) defines an agreement as “every promise and every set of promises,
forming the consideration for each other.” An agreement is thus a mutual
understanding or arrangement between two parties, where each promise serves as
the consideration for the other. In essence, an agreement consists of an offer made
by one party and its acceptance by another. However, for an agreement to become a
legally enforceable contract, it must fulfill additional criteria as specified in the Indian
Contract Act, such as lawful object, capacity of parties, and free consent.

3. Consideration (Section 2(d))

Consideration, as per Section 2(d), involves an act or abstention by the promisee at


the desire of the promisor. Consideration is a fundamental element in a contract,
representing something of value exchanged between the parties. The principle of
consideration is encapsulated in the Latin phrase “quid pro quo,” meaning “something
for something.” Consideration can be in the form of an act, abstention, or promise to
do or abstain from something, and it can move from the promisee or any other person.
A contract without valid consideration is generally void, with a few exceptions, such
as agreements made out of love or affection in certain situations.

For example, if A promises to sell his bike to B for ₹10,000, B’s payment of ₹10,000 is
the consideration for A’s promise to transfer ownership of the bike. In the landmark
case of Chinnaya v. Ramaya, the court held that consideration can flow from a third
party, not necessarily the promisee.

4. Proposal/Offer (Section 2(a))

Section 2(a) describes a proposal or offer as a situation where “one person signifies
to another his willingness to do or to abstain from doing anything, with a view to
obtaining the assent of that other to such act or abstinence.” A proposal is the initial
step in forming an agreement. The person making the offer is called the “offeror,” and
the person to whom the offer is made is the “offeree.” The purpose of making an offer
is to get the acceptance of the other party to create a binding obligation.

The offer must be specific and clear in its terms to be valid. Offers can be general
(made to the public at large) or specific (directed to a specific individual). A well-
known case illustrating the concept of a general offer is Carlill v. Carbolic Smoke Ball
Co., where the court held that an offer made to the public could be accepted by anyone
who fulfills the conditions specified in the offer.

5. Acceptance & Promise (Section 2(b))

According to Section 2(b), acceptance occurs when the person to whom a proposal
is made signifies their assent to it. A proposal, once accepted, becomes a promise,
which is an enforceable part of the contract. Acceptance must be absolute and
unqualified, meaning it should match the terms of the offer without modifications.
Furthermore, acceptance must be communicated to the offeror to form a binding
contract.

For example, if A offers to sell his car to B for ₹2 lakh, and B accepts the offer without
any alteration in terms, it constitutes acceptance. This acceptance transforms the
offer into a promise, creating a contract between A and B. If B modifies the offer
terms, it would constitute a counter-offer rather than acceptance.

Offer under Section 2(a) of the Indian Contract Act, 1872

Under Section 2(a) of the Indian Contract Act, an offer or proposal is defined as “when
one person signifies to another his willingness to do or to abstain from doing
anything, with a view to obtaining the assent of that other to such act or abstinence.”
An offer is the foundation of contractual obligations, marking the initiation of an
agreement. For a valid offer, the following essential aspects are required:

Key Elements of a Valid Offer

1. Intention to Create Legal Obligation

o An offer must be made with the intention to create legal relations. The
offeror’s willingness should reflect an intention to bind themselves
legally upon acceptance by the offeree.

2. Consideration in Action or Inaction

o An offer can relate to an action (doing something) or inaction


(abstaining from doing something). This action or inaction serves as the
consideration provided by the offeror to the offeree.

3. Communication and Signification

o For an offer to be valid, it must be effectively communicated to the


offeree, either expressly (verbally or in writing) or impliedly through
conduct. Without proper communication, the offeree cannot accept the
offer, as illustrated in various cases.

4. Certainty in Terms
o The terms of the offer must be clear and definite, leaving no ambiguity
about the intent and obligations of the offeror. Uncertain or vague terms
may render the offer void.

5. Types of Offers

o General Offer: Made to the public at large, allowing any member of the
public to accept by fulfilling the specified terms. This type of offer is
common in advertisements.

o Specific Offer: Directed toward a particular individual or group, and only


the specific party can accept it.

Case Laws Illustrating the Concept of Offer

1. Lalman Shukla v. Gauri Dutt (1913)

o In this case, a servant, Lalman Shukla, was asked by his master to


search for a missing boy. Later, the master announced a reward for
anyone who found the boy, but Lalman was unaware of this offer when
he found the boy. He later sought the reward but was denied, as the
court held that an offer should be known to the offeree before
acceptance.

o Legal Principle: This case highlights that an offer must precede


acceptance for it to be binding. Without awareness of the offer,
acceptance cannot be implied, and thus no contract is formed.

2. Weeks v. Tybald (1605)

o In this English case, the defendant publicly declared that he would


reward anyone who would marry his daughter with a specific dowry.
When a suitor tried to claim the reward after marrying his daughter, the
court ruled that a general declaration without specific intent to contract
with each individual was not a valid offer.

o Legal Principle: For a general offer to be enforceable, it must convey a


clear intention to contract. Statements of intent or general promises
without such intention do not constitute binding offers.

3. Carlill v. Carbolic Smoke Ball Co. (1893)

o In this landmark case, Carbolic Smoke Ball Co. advertised that it would
pay £100 to anyone who contracted influenza after using their product
according to instructions. Mrs. Carlill used the product but still fell ill.
She claimed the reward, and the company argued there was no binding
contract. The court sided with Mrs. Carlill, stating that the company’s
advertisement constituted a general offer to the public, and by fulfilling
the terms, she had accepted the offer.

o Legal Principle: The court ruled that acceptance of a general offer does
not always require explicit communication; performing the specified act
suffices. This case illustrates that fulfilling the conditions outlined in a
general offer implies acceptance.

The concept of an offer under Section 2(a) is crucial in contract formation. Through
the essential components like intention, consideration, communication, certainty, and
various types of offers (general and specific), the law clarifies when an offer becomes
enforceable. Landmark cases such as Lalman Shukla v. Gauri Dutt, Weeks v. Tybald,
and Carlill v. Carbolic Smoke Ball Co. offer substantial insights into the interpretation
of offer-related disputes and reinforce the fundamental requirement of a
communicated, intentional, and clear proposal to initiate legally binding agreements.

Consideration in Contract Law (Section 2(d) and Section 25 of the Indian Contract Act,
1872)

Definition and Essential Characteristics

Section 2(d) of the Indian Contract Act defines consideration as an act, abstention, or
promise provided by the promisee or another person at the desire of the promisor. In
simple terms, consideration is the “price” paid for the promisor’s promise, and it
forms the foundation of most enforceable agreements. This aspect of consideration
ensures that there is a reciprocal exchange, grounding the contractual obligation.

To be valid, consideration must:

• Have some recognized value under the law.

• Involve an act or abstention performed by the promisee or any other person


at the promisor’s request.

• Fulfill the purpose of a contractual promise; otherwise, it is deemed


unenforceable.

Key Principles of Consideration

1. Agreement Without Consideration is Generally Void (Section 25)

o According to Section 25, an agreement made without consideration is


void unless it falls within specific exceptions:
1. Written and Registered Agreements: Agreements made out of
love, affection, or voluntarily in writing and registered, like
agreements between family members.

2. Compensation for Past Voluntary Services: A promise to


compensate for an act voluntarily done in the past at the
promisor’s desire, such as rewarding a person who saved the
promisor’s property.

3. Payment of a Time-Barred Debt: A promise to pay a debt barred


by limitation law, enforceable if made in writing and signed by the
debtor.

2. Value in the Eyes of Law

o Consideration must carry legal value, even if nominal. This means that
consideration need not be equal to the promisor’s promise but must be
sufficient under the law. Thus, trivial consideration may still create
enforceable obligations if the parties intend to create a binding contract.

3. Acts, Abstinence, or Promises

o Consideration may involve doing or refraining from an action, as long


as it meets the promisor’s desire. For example, if A promises to pay B a
certain sum to abstain from certain behaviors, B’s abstinence
constitutes valid consideration.

4. Abstinence as Consideration

o Abstention from performing a legal act, at the promisor’s request, is


also regarded as valid consideration. For instance, promising to not
pursue legal action can be valid consideration, provided it is done at the
promisor’s desire.

5. Existing Duties and Valid Consideration

o Performing an existing legal or contractual duty generally does not


qualify as valid consideration, as it does not involve any additional act
or abstention at the promisor’s request. For example, if a public servant
performs their official duties, it does not amount to consideration for
any other agreement.

6. Unilateral Promises and Enforceability

o Unilateral promises, where only one party is bound without any


consideration from the other, are generally unenforceable in contract
law. This principle reinforces the need for reciprocal obligations.
7. Return Promise Not at Promisor’s Desire

o For consideration to be valid, it must originate from the promisor’s


request. A return promise made without the promisor’s initial request
does not constitute enforceable consideration.

Illustrative Case: Chinnaya v. Ramaya

In Chinnaya v. Ramaya, a case that illustrates consideration flowing from a third party,
a promise was upheld where the promisor directed consideration to a third party. The
court ruled that consideration need not solely involve the direct parties to the
contract, broadening the scope for who may fulfill consideration requirements.

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