Section 25 of Indian Contract Act

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.— 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 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

(a) A promises, for no consideration, to give to B Rs. 1,000. This is a void agreement.

(b) A, for natural love and affection, promises to give his son, B, Rs. 1,000. A puts his promise to B into writing and registers it. This is a contract.

(d) A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a contract.

(e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract.

(f) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A’s consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration.

(g) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to the agreement was freely given. The inadequacy of the consideration is a fact which the Court should take into account in considering whether or not A’s consent was freely given.

Final Thoughts

Introduction

Section 25 of the Indian Contract Act is a very important legal provision that deals with agreements made without consideration. The basic rule in contract law is that every valid contract must have consideration — which means something of value must be exchanged between parties. However, Section 25 explains when an agreement without consideration can still be valid and binding.

Meaning of Consideration in Contracts

Consideration means something in return, such as money, goods, or services. It is the price paid for the promise of the other party in a contract. If there is no consideration, usually the agreement is not legally enforceable.

Exceptions to Void Agreements

Section 25 mentions three exceptions where agreements without consideration can still be valid contracts:

If the agreement is in writing and registered, and based on natural love and affection between parties related closely.
If the promise is to compensate a person who has already done something voluntarily for the promisor.
If the promise is in writing and signed to pay a debt that is otherwise barred by the law of limitation.

Detailed Explanation of Each Exception

1. Agreement in Writing and Registered Based on Natural Love and Affection

This applies to family members or close relations.
The agreement must be written and registered according to the law.
The promise is made out of natural love and affection without any exchange of consideration.
Example: A father promises his son Rs. 1,000 in writing and gets it registered. This is a valid contract despite no consideration.

2. Promise to Compensate for Voluntary Services

When someone voluntarily does something for another person without expecting payment.
Later, the other person promises to compensate or pay for those services.
This promise is binding, even though the services were done without asking.
Example: A finds B’s lost purse and returns it. B then promises to pay A Rs. 50. This promise is valid.

3. Promise to Pay a Debt Barred by Limitation Law

If a person owes a debt but the period to legally claim it (limitation period) has expired.
The debtor makes a written promise to pay the debt or part of it.
This written promise revives the debt and becomes enforceable.
Example: A owes B Rs. 1,000 but the debt is barred by limitation law. A signs a written promise to pay Rs. 500. This is a contract.

Explanations Under Section 25

Explanation 1: Gifts made by a donor to donee are valid even without consideration. This means Section 25 does not affect the validity of gifts.
Explanation 2: Even if consideration is inadequate, the contract is not void if consent is freely given. However, courts may consider the inadequacy of consideration when deciding if consent was genuine.

Important Illustrations to Understand Section 25

(a) A promises B Rs. 1,000 without any consideration — this is void.
(b) A, out of love for his son B, promises Rs. 1,000 in writing and registers it — this is a valid contract.
(c) A finds and returns B’s purse; B promises to pay Rs. 50 — valid contract.
(d) A supports B’s infant son; B promises to pay A’s expenses — valid contract.
(e) A owes B Rs. 1,000, but debt is barred by limitation; A promises in writing to pay Rs. 500 — valid contract.
(f) A sells a horse worth Rs. 1,000 for Rs. 10; A’s consent was freely given — valid contract despite inadequate consideration.
(g) A sells horse for Rs. 10 but denies free consent; court considers inadequacy of consideration in deciding consent.

Conclusion

Section 25 of the Indian Contract Act clearly states that agreement without consideration is void, but gives important exceptions to protect family love, voluntary services, and debts barred by limitation. These exceptions ensure fairness and uphold promises made in special circumstances. Understanding this section helps in identifying when promises are legally binding even without the usual exchange of value.