According to Section 2(d) of the Indian Contract Act, 1872, consideration is defined as: “When at the desire of the promisor, the promisee or any other person as done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such act or abstinence or promise is called consideration for the promise".

Under the contract law consideration is payment or money and it is a vital part of a contract. Consideration is one of the essentials of a valid contract under Section 10 of the Indian Contract Act, 1872. In any contract, one consideration (thing) is exchanged for another consideration (thing). 

The consideration can be past, present or future. 

  1. Past consideration - Consideration given by the promisor before the promise is made is called as past consideration. 

Example: X employs Y to work on his field for months for agriculture harvesting and promised to pay Y Rs. 2000 for the services, on sowing the new crops in his field. 

  1. Present consideration – If the promise and the consideration take place simultaneously, then it is called as present consideration.

Example: A goes to a shop, buys some things and pays money on the spot.

  1. Future consideration – If the consideration for any promise moves after a contract is entered into is referred as future consideration. 

Example: A promises to pay B Rs. 20,000 for creating some house plans, only if they are approved by his wife. 

The consideration promised cannot be unlawful in nature. It cannot be against the law or any public policies.

Example: If Mr. X offered to pay Rs. 15,000 to murder his business partner but then after the work is done Mr. X refuses to pay the same. In this case, Mr. X cannot be sued because the consideration here is against the law.