Question

Principle: A contract that is duly supported by real and lawful consideration is valid not withstanding 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 of whether the consent of the promisor was freely given.

Facts: 'A' agrees to sell his mobile phone worth ₹20000 for ₹100 only to ‘B’ as the content is freely given.
Which of the following derivations is correct?

Options

• 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 ₹20000 cannot be sold for just ₹100

• None of the above

Answer 1

There is a contract between 'A' and 'B'

Explanation:

According to Explanation 2 of Section 25 of the Indian Contract Act 1872, 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. In the given situation, A agrees to sell his phone worth ₹20000 for ₹100 only to B, though the consideration is inadequate, the consent of A is given freely so, there is a contract between A and B.