Question

Inadequacy of consideration does not make the contract _________:

• A. Void;
• B. Voidable;
• C. Unenforceable;
• D. Neither void nor voidable;

Hint:

Consideration must exist but need not be adequate — inadequacy alone does not make a contract invalid.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept of Consideration:
Consideration is defined under Section 2(d) of the Indian Contract Act as “something in return” given by the promisee to the promisor. It forms the essential basis of every valid contract. However, the law does not require the consideration to be adequate — it only needs to exist and be lawful.
Step 2: Legal Provision – Section 25 Explanation 2:
According to Explanation 2 of Section 25, “An agreement made without consideration is void, but inadequacy of consideration does not make a contract void.” The courts are not concerned with the adequacy of consideration unless it indicates fraud, coercion, or undue influence.
Step 3: Example for Better Understanding:
If A sells his car worth ₹5,00,000 to B for ₹1,000, the contract is still valid because there is some consideration, even if inadequate. However, if the inadequacy is so extreme that it indicates the presence of fraud or coercion, the court may examine it.
Step 4: Final Conclusion:
The correct answer is (D) Neither void nor voidable, as inadequacy of consideration alone does not affect the validity of a contract unless other vitiating factors are present.