Contracts without consideration

Sociology | Mercantile Law | International Law | International Relations

If there is no consideration; there is no contract. However, there is some exception to this rule.

In the following cases, contracts shall be valid and effective without consideration.

1. Natural love and affection
A contract without consideration is enforceable if the following conditions are satisfied:

  • The contract is made out of natural love and affection
  • The contract is registered
  • The contract is in writing
  • Parties to it stand in near relation to one-another

2. Compensation for voluntary services
A promise to compensate wholly or in part, a person who has already voluntarily done something for the promiser is enforceable. Hence, there are two conditions:

  • The service should have been rendered voluntarily, and
  • For the promiser

For example, A finds documents of B and handedover to him. B promise to pay A. This is a contract.

3. No consideration is required to create an agency

4. No consideration is required to completed gifts
When there is agreement for gift that has been made, this is a contract and does not require consideration. For example, A school announced gifts to students obtained first 3 positions in exams. This is a contract.

5. Contracts under seal
A contract made in the form of deed under seal is valid and does not require consideration.