What are the rules of consideration under the Law of Contract?

Consideration in terms of a contract means anything given in exchange for something. It is simply based on the principle of quid pro quo meaning favor or advantage granted in return of something. According to S. 2(d) of the Indian Contract Act, 1872 following rules apply to consideration:
  1. Consideration is a must for every contract which means that except for the conditions stated in S. 25 a contract without consideration is not a valid contract.
  2. Consideration may be an act or abstinence which means a denial to act.
  3. It must be initiated only at the desire of the promisor and not otherwise. This means that even if the promisor is not to be benefitted by the consideration but it must be moved only at his willingness.
  4. Consideration may be given either by the promisee or any other person.
  5. Consideration may either be past, present or future. This means that if an act or abstinence had been done in past it is considered as past consideration; if it is to be done at present it is present consideration and if it is promised to be done in the future, it is a future consideration.
  6. It is not necessary under the Contract Act that the consideration must be adequate. So, anyone can sell a property worth a million for Rs 1 only and vice versa.
  7. It is, however, a necessary condition that the consideration must be lawful. So, one cannot demand to murder someone in exchange for a diamond ring. S. 23 of the Contract Act states explicitly what shall not be considered a lawful consideration.
  8. Lastly, consideration must be real. It means that one cannot ask for anything imaginary or unreal as consideration.
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