Indian Contract Act Section 25 — Agreement without consideration, void, unless it is in writing and registered,or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law
CHAPTER II OF CONTRACTS, VOIDABLE CONTRACTS AND VOID AGREEMENTS — Void agreements
Commercial / Corporate
Summary
An agreement made without consideration is void, meaning it cannot be enforced, unless it falls into one of the three situations described below.
Sub-section (1) covers an agreement that is made in writing and registered under the law for registration of documents, and is made because of natural love and affection between parties who are close relatives. If these conditions are met, the agreement is valid even without consideration.
Sub-section (2) covers a promise to compensate a person, either fully or partly, for something that the person has already voluntarily done for the promisor, or for something that the promisor was legally required to do. This means a promise to pay for past voluntary acts or acts that were legally compulsory can be enforced.
Sub-section (3) covers a promise, made in writing and signed by the person to be charged with it, or by that person's authorized agent, to pay a debt, either fully or partly, that the creditor could have enforced payment of but for the law of limitation of suits. This means a written promise to pay a time-barred debt is valid.
In any of these three cases, such an agreement is a contract.
Explanation 1 states that nothing in this section affects the validity of a gift that has actually been made, as between the donor and the donee.
Explanation 2 states that an agreement where the promisor's consent is freely given is not void merely because the consideration is inadequate. However, the court may consider the inadequacy of consideration when deciding whether the consent was freely given.
Official Text
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 1[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 to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless;
(3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract.
Explanation 1.—Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.
Explanation 2.—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. Illustrations