Principle A contract which is duly supported by real and lawful consideration is valid notwithstandi...........

Indian Contract Act (ICA)1872 Consideration of Contract

Principle: A contract which is duly supported by real and lawful consideration is valid notwithstanding the fact that the consideration is inadequate. The quantum of consideration is for the parties to decide at the time of making a contract, and not for the courts (to decide) when the contract is sought to be enforced. An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.

Facts: ‘A’ agrees to sell his mobile phone worth t 20,000/- for 100/- only to ‘B’. A’s consent is freely given.

Which of the following derivations is CORRECT?

There is a contract between ‘A’ and ‘B’

There is no contract between ‘A’ and ‘B’ because consideration is not adequate

There is no contract between ‘A’ and ‘B’ because a mobile phone worth 20,000/- cannot be sold for just 100/-

None of the above.

Explanation:

As per the principle the adequacy of consideration is irrelevant,
so long as it is legal, valid and specified freely by the parties.
In the facts given there is nothing to indicate that Adid not give his consent freely, thus the contract will be a valid one.