BUSINESS ADMINISTRATION
BUSINESS LAW
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Consideration must be adequate
|
|
|
Agreement without consideration is valid
|
|
|
Contract of agency is valid without consideration
|
|
|
Agreement to compensate for past voluntary service is valid
|
Detailed explanation-1: -Past Voluntary Services If a person has done a voluntary service in the past and the beneficiary promises to pay at a later date, then the contract is binding provided: The service was rendered voluntarily in the past. It was rendered to the promisor.
Detailed explanation-2: -As per Sections 10 and 25 of the Indian Contract Act, the contract is void without consideration, hence the rule is “No consideration, no contract”. However, under Section 25 of the Contract Act, exceptions are mentioned whereby an agreement made without consideration will not be void.
Detailed explanation-3: -Introduction. Section 25 of the Contract Act reads-“Agreements without consideration, void unless it is writing and registered or is a promise to compensate for something or is a promise to pay a debt barred by limitation law”.
Detailed explanation-4: -In India, past consideration is a good consideration. It is sufficient to support a promise. Section 2(d) of the Contract Act clearly lays down that consideration may be past, present or future. Hence an agreement based on past consideration is perfectly valid in India.