Present Consideration

Meaning of Present Consideration

Present consideration, also called executed consideration, refers to consideration that is performed at the time of the promise or transaction.

Under Section 2(d) of the Indian Contract Act, 1872, consideration may consist of an act, abstinence or promise done or given at the desire of the promisor. When the consideration is performed immediately, it is commonly described as present or executed consideration.

In simple terms:

Present Consideration = Immediate performance in return for a promise or performance

Example

A enters a shop and purchases a book from B for ₹500. A immediately pays ₹500 and B immediately delivers the book.

Here:

• A’s payment is consideration for B’s delivery of the book.
• B’s delivery is consideration for A’s payment.
• Both performances take place immediately.

This is present or executed consideration.

Statutory Basis

The expression “present consideration” or “executed consideration” is not separately defined in the Indian Contract Act, 1872.

The concept arises from the definition of consideration under Section 2(d).

Section 2(d) includes an act or abstinence that has been done or is being done at the desire of the promisor.

Therefore, consideration may be classified according to the time of performance as:

1. Past consideration — already performed
2. Present or executed consideration — performed immediately
3. Future or executory consideration — promised to be performed later

Essentials of Present Consideration

1. Consideration is performed immediately

The defining feature is that the consideration is performed at the time of the transaction.

For example:

A buys a pen from B and immediately pays ₹100.

The payment and delivery occur immediately.

2. The act must be at the desire of the promisor

Like other forms of consideration, the act must satisfy the requirement of Section 2(d).

For example:

A asks B to deliver certain goods and promises to pay immediately upon delivery. B delivers the goods as requested.

The delivery is consideration because it is performed at A’s desire.

3. The consideration must have legal value

The act, abstinence or performance must have legally recognizable value.

A purely moral act does not become consideration merely because it occurs at the same time as a promise.

4. The consideration must be lawful

Under Section 23, consideration must not be unlawful.

For example, payment made in return for carrying out an illegal activity cannot constitute lawful consideration for an enforceable contract.

5. The consideration must correspond to the contractual promise

The act performed should be connected with the promise for which it is consideration.

For example:

A promises to pay B ₹10,000 for delivering specified goods. B delivers those goods and A pays.

The delivery and payment are directly connected.

Examples of Present Consideration

Example 1: Sale of Goods

A purchases a laptop from B for ₹50,000.

A pays immediately and B hands over the laptop.

The payment and delivery constitute present or executed consideration.

Example 2: Immediate Service

A asks B to wash his car for ₹500.

B washes the car and A immediately pays ₹500.

The performance of the service and payment occur as part of the same transaction.

Example 3: Reward

A announces:

“₹10,000 will be paid to anyone who finds and returns my lost dog.”

B, knowing of the offer, finds and returns the dog.

B’s performance of the condition may constitute executed consideration for A’s promise to pay.

This also illustrates acceptance by performance under Section 8.

Present Consideration and Executed Consideration

The terms present consideration and executed consideration are generally used interchangeably in contract-law study materials.

The word executed emphasizes that the promised act has already been performed as part of the transaction.

For example:

A pays ₹1,000 and B immediately delivers the goods.

The consideration has been executed rather than merely promised for the future.

Present Consideration vs Past Consideration

The two concepts are often confused.

Past Consideration

The act was performed before the promise for which it is treated as consideration.

Example:

B repairs A’s machine at A’s request. After the repair, A promises to pay B ₹10,000.

Present Consideration

The act and the promise/performance occur as part of the same transaction.

Example:

B repairs A’s machine for ₹10,000 and A immediately pays B after the repair.

Key Difference

Past = Performance before the relevant promise

Present = Immediate performance in the transaction

Present Consideration vs Future Consideration

Basis	Present Consideration	Future Consideration
Other name	Executed consideration	Executory consideration
Timing	Performed immediately	Promised for the future
Outstanding obligation	Generally performed immediately	Remains to be performed
Example	A pays and B immediately delivers goods	A promises to deliver goods next month and B promises future payment

Present Consideration and Section 8

Present consideration is closely related to Section 8, which provides for acceptance by performing the conditions of a proposal or accepting consideration offered with a proposal.

For example:

A offers ₹5,000 to anyone who returns his lost document.

B knows about the offer and returns the document.

B has accepted the offer through performance.

The performance is therefore both:

• a mode of acceptance, and
• an example of executed consideration in the appropriate contractual context.

Present Consideration in Bilateral Contracts

Present consideration commonly occurs in transactions where the parties perform their obligations immediately.

For example:

A purchases a book from B.

• A pays the price.
• B delivers the book.

Both sides perform their obligations immediately.

This is different from an executory contract where both parties promise to perform later.

Present Consideration in Unilateral Contracts

Present or executed consideration is particularly visible in unilateral contracts.

In such arrangements, one party makes a promise in return for the performance of a specified act.

For example:

“₹20,000 will be paid to anyone who finds my lost dog.”

The person does not merely promise to find the dog. The person accepts through actually performing the required condition.

Important Case: Carlill v. Carbolic Smoke Ball Co.

Carlill v. Carbolic Smoke Ball Co. (1893)

The company publicly offered a reward to anyone who used its product according to specified directions and nevertheless contracted influenza.

Mrs. Carlill fulfilled the conditions stated in the advertisement.

The case illustrates that a general offer can be accepted through performance of its conditions, without a separate prior communication of acceptance.

It is therefore useful when explaining executed consideration and acceptance by conduct.

Important Case: Chinnaya v. Ramaya

Chinnaya v. Ramaya (1882)

This case established that consideration may move from the promisee or any other person under Section 2(d).

Although the case is not specifically about present consideration, it is important when discussing the general requirements of consideration under Indian law.

Present Consideration and Adequacy

Present consideration does not have to be adequate.

For example:

A sells a watch worth ₹10,000 to B for ₹2,000, and B immediately pays ₹2,000.

The consideration may be inadequate, but inadequacy alone does not make the agreement void if the parties have freely consented and the other legal requirements are satisfied.

Under Section 25, inadequacy of consideration may nevertheless be relevant when determining whether consent was freely given.

Important Points for Exams

1. Present consideration is also called executed consideration.
2. It is consideration performed immediately as part of the transaction.
3. The concept arises from Section 2(d) of the Indian Contract Act, 1872.
4. The act must be performed at the desire of the promisor.
5. Consideration must be lawful and have legal value.
6. Present consideration differs from past consideration, which relates to an earlier completed act.
7. Present consideration differs from future consideration, where performance is promised for the future.
8. Section 8 is relevant where acceptance occurs through performance.
9. Carlill v. Carbolic Smoke Ball Co. illustrates acceptance through performance.
10. Chinnaya v. Ramaya establishes that consideration may move from the promisee or any other person.

Quick Revision

Present Consideration: Consideration performed immediately.

Also called: Executed consideration

Main statutory basis: Section 2(d)

Example: A pays ₹500 and B immediately delivers a book.

Past: Act performed before the relevant promise

Present: Immediate performance

Future: Performance promised for the future

Related provision: Section 8 for acceptance through performance

Conclusion

Present consideration, or executed consideration, refers to consideration that is performed immediately as part of a contractual transaction. It is recognized within the broad definition of consideration under Section 2(d) of the Indian Contract Act, 1872. Unlike past consideration, the performance is not completed before the relevant transaction, and unlike future consideration, it is not merely promised for the future. Immediate payment and delivery of goods, or immediate performance of a requested service, are common examples of present consideration.