Language
Country/Area
No result found
What is ‘past consideration’? Why is it invalid in English law but valid in Indian law?
In the world of contract law, consideration is a key concept. It is not only a necessary condition for simple contracts in English common law, but also an important principle widely used in many legal systems. The English court in Currie v Misa defined consideration as "right, interest, profit, benefit or forbearance, loss, liability". This means that in order for a contract to be legally binding, both parties must each provide some valuable promise or behavior. However, in English law, "past considerations" are not recognized, which is in stark contrast to the situation in Indian law, where past considerations are accepted.
Past considerations are considered void in English law but are recognized in Indian law.
In English law, for valid consideration there must be a certain temporal relationship between the promise and the consideration (i.e. the corresponding benefit in the contract). Specifically, past consideration refers to actions or contributions that were made before the promise was made, and such consideration is not legally binding. That is, if A does something for B, and B later promises to pay A a certain amount of compensation, then B’s promise cannot be legally enforceable because the consideration at that time is already something that happened in the past.
In contrast, Section 1872 of the Indian Contract Act clearly states that the consideration can be for past, present or future acts. Under this legal provision, as long as these actions are performed at the request of the party making the promise, they can be considered valid consideration regardless of when they occurred. Therefore, if A does something in the future in return for B's promise, a legal contract can still be established even if A's action is actually done before B's promise.
Under English law, contracts are subject to the existing legal requirements of consideration, while Indian law shows tolerance for diverse considerations.
The English legal position on past considerations emphasises the quest for legal certainty, ensuring that all contractual considerations are legally binding at the time the promise is made. This is especially important in business because it avoids legal disputes arising from unclear past actions. However, the limitations of this system are also obvious. This can create an unfair situation when one party to a contract provides past services or actions but does not receive a corresponding reward.
In contrast, Indian law allows parties to maintain flexibility in their commercial relationship by relying on past considerations when forming a contract. This has led to a more relaxed business environment that adapts to rapidly changing business needs. But it also brings more legal risks, as disputes over whether past actions constitute valid consideration may give rise to more complex legal issues.
Past considerations in English law are invalid, and its strict requirements are intended to maintain clarity of contract, while Indian law adopts more flexible provisions in response to commercial needs.
In practice, the influence of historical traditions cannot be ignored. British contract law was influenced by ancient design contracts and emphasized reciprocal commitments between the two parties. This requirement for consideration prompts both parties to be more cautious in the process of contract formation to avoid the lack of legal liability due to the legality of consideration. The flexibility of Indian law is the result of years of business practice, reflecting the nature of the legal system that constantly adjusts itself as social needs change.
In general, consideration is an important element in the formation of a contract in both English law and Indian law, but there are significant differences between the two in dealing with past consideration. Such differences not only affect the enforceability of contracts, but also shape different legal environments in business activities. Will future contract law reforms narrow these differences or form a new legal theory system, which is worthy of continued discussion and attention from the legal community?
