Consideration & Privity — KSLU Contract 1 Notes

Consideration & Privity

Consideration (S.2(d)) — “something in return” done at the desire of the promisor; quid pro quo. Its rules: it must move at the promisor’s desire, may move from the promisee or any other person (Chinnaya v. Ramayya, 1882 — unlike English law), may be past, present or future, and need not be adequate but must be real (Explanation 2, S.25). The maxim “no consideration, no contract” (S.25) yields to three exceptions: natural love and affection (registered, between near relations — S.25(1)), past voluntary service (S.25(2)), and a time-barred debt promise (S.25(3)).

Privity of contract — only a party to a contract can sue on it; a stranger cannot (Dunlop v. Selfridge, 1915). India recognises exceptions (a trust/beneficiary, a family arrangement — Khwaja Muhammad v. Husaini Begum, marriage settlement, estoppel). Note the difference: privity of consideration (a stranger to consideration can sue in India) is distinct from privity of contract (a stranger to the contract cannot).