What is the exception to the no consideration no contract rule?
Asked by: Zechariah Wuckert | Last update: February 14, 2026Score: 4.1/5 (58 votes)
The main exceptions to the "no consideration, no contract" rule include promissory estoppel (detrimental reliance on a promise), past consideration (if requested), moral obligations, time-barred debts, contract modifications made in good faith, charitable subscriptions, and specific situations like agency contracts, where written agreements based on natural love and affection (with registration in some jurisdictions) or completed gifts are also recognized.
What are the exceptions to the rule "no consideration, no contract"?
An agreement without consideration is generally void under contract law. Exceptions to this rule exist, including natural love and affection, past voluntary services, and promises to pay debts barred by limitation. Courts evaluate the sufficiency, not fairness, of consideration—unless bad faith is evident.
What are the three exceptions to the consideration requirement?
Exceptions to the requirement
The promise to pay a debt discharged by bankruptcy, the promise to perform a conditional responsibility despite the nonoccurrence of the condition, and the promise to perform on a voidable contract form a category of moral obligations that can bind in the absence of consideration.
What are the exceptions to the rule of consideration?
It outlines several exceptions where an agreement can be enforceable without consideration: 1) Agreements made on account of natural love and affection between near relations, as long as they are in writing and registered. 2) Promises to compensate for past voluntary services that were provided to the promisor.
What happens if there is no consideration in a contract?
When there is a lack of consideration, the contract never was valid or enforceable. In contrast, failure of consideration occurs where a valid contract with a valid consideration becomes unenforceable due to the consideration no longer being valuable.
No Consideration No Contract | Exceptions to No Consideration No Contract | no consideration
Under what conditions is there no consideration?
At common law, past consideration doesn't count, but no consideration is necessary in these cases: where a promise barred by the statute of limitations is revived, where a voidable duty is reaffirmed, where there has been detrimental reliance on a promise (i.e., promissory estoppel), or where a court simply finds the ...
What are the exceptions under Section 25?
What are the exceptions under Section 25? Exceptions include love and affection, past voluntary services, and time-barred debts.
What are the 4 rules of consideration?
In summary, consideration is an essential element in contract law, and it must involve a bargain between the parties, with each party exchanging something of value. The consideration must be sufficient but need not be adequate, must not be past, and must not be illegal or against public policy.
What are the consequences of agreement without consideration?
An agreement made without consideration is void, unless— (1)it is expressed in writing and registered under the law for the time being in force for the registration of 'documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2)it is a promise ...
What is an exception to the rule requiring consideration?
Promissory Estoppel is a related principle which can act as the exception to one of the main rules of consideration - that for consideration to be valid, it must have economic value and involve an exchange of benefit/detriment between the parties.
How is consideration proven in court?
For a consideration to be valid, there must be a bargain for the exchange. In most cases, as long as an adequate opportunity to negotiate or bargain is provided, a court will not question the validity of consideration just because a party has made a bad bargain.
Why does the law say past consideration is no consideration?
Consideration is something of value given by the offeror at the time of the promise made by the offeror, past consideration is therefore legally no consideration at all in most states. For consideration to be valid, the offeror's promise must induce the offeree to act.
What is a doctrine under which no consideration is needed?
Promissory estoppel may apply even if a formal contract does not exist, such as when there is no consideration to support a binding agreement. Compare with contract law principles requiring mutual consideration.
What happens if there is no consideration?
If someone promises to provide something to another person gratuitously, and then fails to do so, there can be no legal enforcement of that promise. This is because in this case, no consideration has given.
Is no consideration no contract true or false?
The Indian Contract Act of 1872 states that for any contract to be legally binding, consideration should be provided. An agreement without consideration is not considered valid.
What are the five exceptions to the privity rule in the law of contract?
There are some exceptions to the doctrine of privity of contract, under which a third party to a contract may sue in certain circumstances. Among these exceptions are trust exceptions, property exceptions, contract assignment exceptions, and third-party insurance exceptions.
What happens if a contract has no consideration?
When both parties had an agreement, each of the parties has to furnish by consideration by give other something or do a favor as exchange. A contract is void without consideration.
Under what situations is consideration not binding?
Consideration is not binding if the promise does not create a duty or impose an obligation such as with illusory promises. Illusory promises include termination clauses in contracts and output and requirements contracts.
What does "no consideration" mean in law?
Without consideration, there is no legal contract between the parties. Thus, if a plaintiff sues for breach of contract, a defendant can try to argue that there was no consideration when the contract was formed, so there is no legally valid contract for the plaintiff to sue under.
What are the three requirements of consideration?
Consideration requires mutual exchange, legal value, and a bargained-for exchange. Consideration can be executed (immediate), executory (future), or past (usually invalid). Common consideration issues include inadequate value, past actions, and preexisting duties.
What are the exceptions to the pinnel's case?
Exceptions to the Rule
Prepayment of debt at the creditor's request; Payment of a lesser sum at another place at the creditor's request; A contract with creditors after insolvency of the debtor; The parties enter into a deed of release; and.
What are the 5 rules of contract law?
To understand that, you need to know about the 5 essential elements of a valid contract: offer, acceptance, consideration, mutual intent, capacity and legality. Understanding these 5 fundamental elements of a contract can help you protect your interests and avoid potential legal disputes.
Are there any exceptions to the no consideration no contract rule?
But there are some specific exceptions to the “No consideration no contract” rule. If an agreement is in writing and registered between two parties in close relation (like blood relatives or spouse), based on natural love and affection, then such an agreement is enforceable even without consideration.
How far is it true that an agreement without consideration is void?
The exception to the 'no consideration, no contract' rule. Section 25 of the Act lays down a few exceptions where the contract without consideration is not void. According to Section 25, an agreement made without consideration is void unless: It is the contract in writing and registered.
What is Satyabrata v Mugneeram case?
Satyabrata Ghose v Mugneeram Bangur & Co is a landmark Indian contract law case regarding contract frustration. This case involves a firm that separated a huge piece of property into numerous smaller ones and sold each one separately. On August 5, 1941, the plaintiff paid 101 rupees to secure the tract of property.