The law relating to contracts forms one of the most fundamental aspects of the legal arena. We individuals get into contracts on a day to day basis be it with friends, relatives or colleagues. Since, we live in a world where we keep entering into contracts, it often becomes imperative to analyse the various components of a contract. Out of all the components constituting a contract, the most important is consideration.
The concept of consideration is the most basic and essential feature of a valid contract. Consideration is based on the phrase, “quid pro quo”. Consideration basically means something in return for the promise made by the offeror. Sir Frederick Pollock has defined consideration, “It is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.” In the case, Curie v. Misa (( LR 10 Ex 153; (1875-76) LR 1 App Cas 554))the term was defined, “A valuable consideration in the sense of the law may consist of some right, interest, forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other”. The Indian Contract Act states, “When at the desire of the promissory, the promise or any other person has done or abstained from doing something or does or abstains from doing something or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise.”
The maxim ex nudo pacto non oritur actio means, “No action arises on a contract without consideration”. Since consideration is the founding platform to a contract, a contract without consideration is void. In the case of S. Parameswari vs. Balasubramanian ((SECOND APPEAL No.881 of 1997)), the court held that in this case there was no breach of contract by the defendant , since the plaintiff could not prove consideration from her side. Since, there was no consideration from the side of the plaintiff, the contract was declared void.
Though a contract without consideration is void, there are certain exceptions to this as present in Section 25, Indian Contract Act. As per Section 25 of Indian Contract Act, an agreement without any consideration is declared to be void, but there are some exceptions in this rule, in which an agreement is enforceable even though they are made without consideration. For instance, contracts made out of love and affection is one instance wherein consideration is not required. Thus with regard to contracts based on love and affection, the maxim does not hold valid. Even in cases involving promises to pay time barred debts since no consideration is required, the maxim ex nudo pacto non oritur actio does not stand validated.
Though these exceptions are present, consideration is still the very basis on which a contract is formed. Without consideration, a contract becomes naked. It is the concept of consideration that brings life to a contract and makes it actionable before the court of law. Thus, the maxim ex nudo pacto non oritur actio is one of the key elements and maxims looked by the court while deciding cases pertaining to contracts.