According to law, agreement without consideration is void. Following are the agreements which are valid even without consideration.
Natural Love and Affection:
The agreement which is expressed in writing and registered under the law and is made on account of natural love and affection between the parties standing in a near relation to each other is enforceable even if there is no consideration. The contact without consideration shall be valid if following conditions are satisfied: (Sec.25)
a. The contact is in writing.
b. The contact is registered.
c. The contact is made on account of natural love and affection.
d. There must be near relation between the parties to the contact.
Examples:
a. A promises to give Rs. 1000 to B for no consideration. It is a void agreement.
b. F on account of natural love and affection promises to give his son S, Rs. 1 Lac. F puts it in writing and gets it registered. S can enforce it.
c. B sued to dispute with his wife R, promised on a registered document to pay some account. Later, B refused to pay. R sued for recovery. It was held that agreement was void because it was not based on natural love and affection.
(Rajlakhi Devi vs. Bhootnath).
2. Voluntary Compensation:
If a promise is made to compensate, wholly or in part, a person who has voluntarily done something for the promisor, is enforceable even though without consideration. In other words, a promise to pay for a past voluntarily service is binding. This is an exception to the principle that past consideration is no consideration. For this exception, the following points should be noted: (Sec 25(2))
a. The services were rendered voluntarily for the promisor.
b. The promisor must be in existence at the time the services were rendered.
c. The intention of the promisor should be to compensate the promisee.
d. The services rendered must be legal.
Examples:
a. A finds B’s purse and returns it to him. B promises to give A Rs. 500. this is a contract.
b. A saves B from drowning in the river and B promises to pay Rs. 10,000 to A. this is a valid contract.
3. Time-Barred Debt:
A debt becomes time-barred if it is not claimed for a period of three years from the date it becomes due. Where there is an agreement, made in writing and signed by the debtor to pay wholly or in part a time-barred, the agreement is valid even though it is not supported by any consideration. Such an agreement is valid if the following conditions are fulfilled. (Sec. 25(3)).
a. The debt must be time-barred.
b. The promisor himself must be liable for the debt.
c. There must be an express promise to pay a time-barred debt.
d. The promise must be in writing and signed by the debtor or his agent.
Example:
A owes B Rs. 1000, but the debt becomes barred. A signs a written promise to pay B Rs. 500 on account of the debt. It is a contract.
4. Completed Gift
A gift does not require consideration in order to be valid. Any gift actually made and possession given will be valid between the donor and the donee even though without consideration. There need not be natural love and affection or nearness of relationship between the donor and donee. The gift must be complet, and it is said to be completed when possession is given to the donees by the donor. (Sec. 25 Explanation).
Example:
A gifted a watch to B on his birthday. Later, A cannot get his watch back on the ground that there was no consideration for him.
5. Contract of Agency:
Consideration is not necessary to create an agency. Generally an agent gets commission for his services. If the agent promises to perform any act for his principle without charging any commission, the agreement is valid even without consideration. (Sec. 185).
Example:
A promises to sell B’s house on his behalf. An agreement between A and B is valid even without consideration.
6. Remission by Promisee:
When a person agrees to receive less than what is due, it is known as remission. If a creditor agrees to give up a part of his claim, there is no need of consideration for such an agreement. Similarly, an agreement to extend time for performance of a contract need not be supported by consideration. (Sec.63).
Example:
A owes B 5,000 rupees. A pays Rs. 2,000 to B and B accepts it in full satisfaction of the whole debt. The whole debt is discharged.