Meaning of Future Consideration
Future consideration, also called executory consideration, refers to consideration that is promised to be performed in the future.
- Meaning of Future Consideration
- Statutory Basis
- Essentials of Future Consideration
- Examples of Future Consideration
- Future Consideration and Reciprocal Promises
- Future Consideration vs Present Consideration
- Future Consideration vs Past Consideration
- Future Consideration and Executory Contracts
- Future Consideration and Section 32
- Future Consideration and Breach
- Future Consideration and Section 37
- Important Cases
- Important Points for Exams
- Quick Revision
In this type of consideration, the parties make promises to perform their respective obligations at a later time. The consideration is therefore not yet performed when the agreement is made.
Under Section 2(d) of the Indian Contract Act, 1872, consideration may consist of a promise to do or abstain from doing something at the desire of the promisor. This forms the statutory basis for executory consideration.
In simple terms:
Future Consideration = Promise now + Performance in the future
Example
A agrees to sell 100 bags of rice to B after one month for ₹2 lakh.
B promises to pay ₹2 lakh when the rice is delivered.
Here:
- A’s promise to deliver the rice is consideration for B’s promise to pay.
- B’s promise to pay is consideration for A’s promise to deliver.
- Neither obligation has yet been performed.
Therefore, the consideration is future or executory.
Statutory Basis
The Indian Contract Act, 1872 does not separately define the expression “future consideration.”
The concept follows from Section 2(d), which includes a promise to do or abstain from doing something as consideration.
It is also closely connected with Section 2(f), which defines reciprocal promises as promises that form the consideration or part of the consideration for each other.
Thus, future consideration is commonly found in contracts involving reciprocal promises.
Essentials of Future Consideration
1. Performance is to take place in the future
The main feature is that the consideration has not yet been performed.
For example:
A promises to deliver goods on 1 December, and B promises to pay on delivery.
The delivery and payment are future obligations.
2. There must be a promise to perform
Future consideration generally takes the form of a promise.
For example:
A promises to paint B’s office next month.
B promises to pay ₹40,000 after completion.
Both parties have undertaken future obligations.
3. The consideration must be at the desire of the promisor
The requirement under Section 2(d) continues to apply.
The promised act or abstinence must be connected with the promise and undertaken at the desire of the promisor.
4. The consideration must be lawful
The future act or abstinence must not be unlawful under Section 23.
A promise to perform an illegal act cannot constitute lawful consideration for an enforceable contract.
5. The promise must have legal value
The future performance must constitute something legally recognizable as consideration.
A purely moral promise or an impossible act cannot ordinarily serve as valid consideration.
Examples of Future Consideration
Example 1: Sale of Goods
A agrees to supply 500 books to B next month.
B agrees to pay ₹1 lakh upon delivery.
Both delivery and payment are to take place in the future.
This is future consideration.
Example 2: Future Service
A promises to provide legal consultancy services to B for six months.
B promises to pay ₹60,000 at the end of the six-month period.
The promised services and payment are future obligations.
Example 3: Construction Contract
A contractor agrees to construct a building within one year.
The owner agrees to make payment according to the agreed schedule.
The contractor’s future performance and the owner’s future payments constitute executory obligations.
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Join WhatsApp ChannelFuture Consideration and Reciprocal Promises
Future consideration is closely connected with reciprocal promises.
Under Section 2(f):
Reciprocal promises are promises which form the consideration or part of the consideration for each other.
For example:
A promises to deliver a laptop to B next week.
B promises to pay ₹60,000 next week.
Here:
- A’s promise is consideration for B’s promise.
- B’s promise is consideration for A’s promise.
Both are executory.
Future Consideration vs Present Consideration
| Basis | Future Consideration | Present Consideration |
|---|---|---|
| Other name | Executory consideration | Executed consideration |
| Performance | To be performed in the future | Performed immediately |
| Status at agreement | Obligations remain outstanding | Consideration is performed |
| Example | A promises future delivery and B promises future payment | A pays and B immediately delivers goods |
Easy Formula
Present: Do now → Receive now
Future: Promise now → Do later
Future Consideration vs Past Consideration
| Basis | Future Consideration | Past Consideration |
|---|---|---|
| Timing | Performance is yet to occur | Performance has already occurred |
| Nature | Executory | Past |
| Example | A promises to deliver goods next month | B already performed a requested service and A later promises payment |
| Main idea | “To be done” | “Already done” |
Easy Formula
Past = Already done
Present = Done now
Future = To be done
Future Consideration and Executory Contracts
Future consideration is commonly found in an executory contract, where one or both parties still have obligations to perform.
For example:
A agrees to sell his car to B for ₹5 lakh.
A will deliver the car on 1 December, and B will pay on 1 December.
Until performance takes place, the promises remain executory.
However, the concepts should not be treated as exactly identical:
- Future consideration describes the nature or timing of the consideration.
- Executory contract describes the status of contractual performance.
Future Consideration and Section 32
Where a contract involves contingent events, the parties’ future obligations may also be affected by the rules relating to contingent contracts under Sections 31–36.
For example, a promise may be made to perform an obligation if a specified uncertain event occurs.
Such situations must be analyzed separately from an ordinary executory contract because a contingent contract depends upon the occurrence or non-occurrence of the specified event.
Future Consideration and Breach
If a party promises future performance but later refuses to perform, the refusal may amount to a breach of contract, depending upon the circumstances.
For example:
A promises to deliver 1,000 units to B on 1 December.
Before the due date, A informs B that he will not deliver the goods.
This may constitute an anticipatory breach under Section 39, depending on the nature of the refusal.
Thus, future consideration creates obligations that may become enforceable even before actual performance is completed.
Future Consideration and Section 37
Section 37 requires parties to perform or offer to perform their respective promises unless performance is dispensed with or excused under the Act or another applicable law.
Therefore, where consideration consists of future promises, the parties are generally required to perform those promises when they become due.
Important Cases
Chinnaya v. Ramaya (1882)
The case established that consideration may move from the promisee or any other person under Section 2(d).
This principle applies to future consideration as well.
Durga Prasad v. Baldeo (1880)
The case emphasizes that consideration must move at the desire of the promisor.
This requirement applies whether the consideration is past, present or future.
Abdul Aziz v. Masum Ali (1914)
The case illustrates the general principle that a promise unsupported by consideration is ordinarily unenforceable, subject to statutory exceptions.
Important Points for Exams
- Future consideration is also called executory consideration.
- It consists of a promise to perform an act or abstain from an act in the future.
- It is recognized through Section 2(d) of the Indian Contract Act, 1872.
- It is commonly found in contracts involving reciprocal promises under Section 2(f).
- Neither party has yet completed the relevant performance when the agreement is made.
- The consideration must be lawful and have legal value.
- The act or promise must be connected with the desire of the promisor.
- Future consideration is different from past and present consideration.
- Future performance may become the subject of a breach if a party refuses to perform.
- Sections 37 and 39 may become relevant when future contractual obligations are due or are repudiated.
Quick Revision
Meaning: Consideration promised to be performed in the future.
Also called: Executory consideration
Main provision: Section 2(d)
Related provision: Section 2(f) — reciprocal promises
Example: A promises to deliver goods next month and B promises future payment.
Past: Already performed
Present: Performed immediately
Future: To be performed later
Important sections: Sections 2(d), 2(f), 37 and 39
Conclusion
Future consideration is consideration that is promised to be performed at a later time. It is commonly known as executory consideration and arises frequently in contracts involving reciprocal promises. Section 2(d) of the Indian Contract Act, 1872 recognizes a promise to do or abstain from doing something as consideration, while Section 2(f) deals with reciprocal promises. Future consideration therefore forms the basis of many ordinary commercial contracts in which both parties undertake obligations to be performed in the future.
