Legal Question in Real Estate Law in India

12.02.2014

Dear Sir / Madam,

The onus lies on the seller to prove that the consideration was inadequate.

There are various rules governing the law of consideration:

1. The consideration must not be past.

2. The consideration must be sufficient but need not be adequate.

3. The consideration must move from the promisee.

4. An existing public duty will not amount to valid consideration.

5. An existing contractual duty will not amount to valid consideration.

6. Part payment of a debt is not valid consideration for a promise to forego the balance.

Case laws summary in the UK and India for each of the above rules :

1. Consideration must not be past:

Re McArdle (1951) Ch 669

Case summary

Past consideration may be valid where it was proceeded by a request:

Lampleigh v Braithwaite [1615] EWHC KB J17

2. Consideration must be sufficient but need not be adequate:

There is no requirement that the consideration must be market value, providing something of value is given eg �1 given in exchange for a house would be valid. The courts are not concerned with whether the parties have made a good or bad bargain:

Chappell v Nestle [1960] AC 87

3. Consideration must move from the promisee

If a person other than the promisee is to provide the consideration, the promisee can not enforce the agreement:

Tweddle v Atkinson [1861] EWHC QB J57

4. An existing public duty will not amount to valid consideration

Where a party has a public duty to act, this can not be used as consideration for a new promise:

Collins v Godefrey (1831) 1 B & Ad 950

Case summary

Unless the promisor goes beyond their duty:

Glasbrook Bros v Glamorgan County Council [1925] AC 270

Ward v Byham [1956] 1 WLR 496

5. An existing contractual duty will not amount to valid consideration

If a party has an existing contractual duty to do an act, this act cannot be used as consideration for a new promise:

Stilk v Myrrick [1809] EWHC KB J58

Case summary

Unless the party goes beyond their existing duty:

Hartley v Ponsonby [1857] 7 EB 872

Case summary

or if they confer a practical advantage:

Williams v Roffey Bros [1990] 2 WLR 1153

Case summary

If the existing contractual duty is owed to a 3rd party this may be used as valid consideration for a new promise:

New Zealand Shipping v Satterthwaite [1975] AC 154

Scotson v Pegg [1861] EWHC Exch J2

6. Part payment of a Debt

Part payment of a debt is not valid consideration for a promise to release the debt in full:

Pinnel's case 1602 5 Rep, 117

Case summary

Part payment of a debt is not valid consideration for a promise to forebear the balance unless at the promisor's request part payment is made:

a). before the due date

b). with a chattel

c). to a different destination

This rule from Pinnel's case was affirmed by the House of Lords in:

Foakes v Beer (1883-84) L.R. 9 App. Cas. 605 Case summary

Further exceptions to the rule in Pinnel's case:

1. Where part payment is made by a third party:

Hirachand Punamchand v Temple [1911] 2 KB 330

Regards,