Executed, Executory and Past Consideration: Meaning, Differences and Case Laws

Consideration is an essential element of a contract, but it does not always take the same form. Sometimes a person performs an act in return for a promise; sometimes both parties exchange promises to perform in the future; and sometimes a promise is made after an act has already been completed. These situations give rise to three classifications of consideration: executed, executory and past consideration.

Understanding the distinction is important because the timing of an act in relation to a promise can determine whether a contractual obligation is enforceable. Under the Indian Contract Act, 1872, all three categories are recognised through the wording of Section 2(d), subject to the applicable requirements. English law generally follows the same approach for executed and executory consideration but takes a stricter position on past consideration.

What Does Section 2(d) of the Indian Contract Act Say?

Section 2(d) of the Indian Contract Act, 1872 defines consideration by referring to an act or abstinence that the promisee or any other person has performed, performs, or promises to perform at the desire of the promisor.

The wording identifies three relevant points in time. The expression “has done or abstained from doing” refers to an act already completed; “does or abstains from doing” refers to an act being performed in return for a promise; and “promises to do or abstain from doing” refers to a future undertaking.

These expressions provide the basis for distinguishing past, executed and executory consideration. Section 2(f), which deals with reciprocal promises, is also relevant because it explains how promises exchanged between parties may constitute consideration for each other.

1. Executed Consideration

Executed consideration arises when an act is performed in return for a promise. The promise is made first, and the other party provides the required performance in response. Once that performance is completed, the party who performed has fulfilled their side of the bargain, while the other party may remain under an obligation to perform the promise.

It is also called present consideration and is commonly associated with unilateral contracts, where an offer invites acceptance through performance rather than through a separate promise to perform.

Example of Executed Consideration

Suppose A announces a reward of ₹1,000 for anyone who finds and returns A’s lost dog. B finds the dog and returns it in response to the offer. B’s act constitutes executed consideration for A’s promise to pay the reward. B has performed the required act, and A is obliged to pay if the conditions of the offer have been satisfied.

Carlill v Carbolic Smoke Ball Co

In Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, a company advertised that it would pay £100 to anyone who used its smoke ball as directed and nevertheless contracted influenza. Mrs Carlill used the product according to the advertised instructions but contracted influenza.

The Court of Appeal held that the company’s promise was enforceable. Mrs Carlill’s performance of the stated conditions constituted acceptance of the offer and consideration for the company’s promise. The case illustrates how completing the act requested by an offer can form a contract without a separate exchange of promises.

A straightforward cash sale can also illustrate executed consideration, because the buyer pays and the seller transfers the goods as part of the same transaction.

2. Executory Consideration

Executory consideration arises when the parties exchange promises to perform their respective obligations in the future. Neither party needs to have completed performance at the moment the agreement is made. Instead, each party’s promise provides consideration for the other party’s promise.

This form of consideration is associated with bilateral contracts. Once the parties have exchanged sufficiently definite and enforceable promises, contractual obligations may arise even though delivery, payment or another promised act is due at a later date.

Example of Executory Consideration

Suppose A agrees to deliver 100 bags of rice to B next month, and B agrees to pay ₹50,000 upon delivery. At the time the agreement is made, A has not delivered the rice and B has not paid. Nevertheless, A’s promise to deliver the rice is consideration for B’s promise to pay, and B’s promise to pay is consideration for A’s promise to deliver.

Section 2(f) of the Indian Contract Act describes such reciprocal promises as promises that form the consideration, or part of the consideration, for each other.

The important point is that performance does not have to be completed before a contract becomes binding. If either party subsequently fails to perform an enforceable contractual obligation, the other party may have a claim for breach, subject to the terms of the contract and the applicable law.

The promises must, however, be sufficiently definite to create enforceable obligations. A promise that is merely illusory or too vague to establish what a party is required to do may not constitute valid consideration.

3. Past Consideration

Past consideration arises when an act has already been completed before the promise for which it is said to be consideration is made. Unlike executed consideration, the act does not occur in response to that promise because the promise comes afterwards.

For example, suppose A repairs B’s fence while B is away. After returning, B promises to pay A ₹500 for the completed work. The repair is past consideration in relation to B’s later promise because the work was completed before the promise was made.

The legal treatment of past consideration is where Indian and English law differ most significantly.

The Position under Indian Law

Indian law recognises past consideration through the wording of Section 2(d), which expressly includes an act that the promisee or another person “has done or abstained from doing” at the desire of the promisor. The timing of the act does not automatically prevent it from constituting consideration.

The requirement that the act must have been performed at the promisor’s desire remains important. In Durga Prasad v Baldeo (1880) ILR 3 All 221, the plaintiff constructed shops at the Collector’s request and later sought to enforce a promise by the defendant, who occupied one of the shops, to pay a commission. The claim failed because the construction had not been undertaken at the defendant’s desire.

Indian law also recognises a specific statutory exception under Section 25(2). A promise to compensate a person who has already voluntarily done something for the promisor, or something the promisor was legally compellable to do, may be enforceable without fresh consideration.

The illustrations to Section 25 include a person who finds and returns another’s purse and a person who supports another’s infant son. A subsequent promise to compensate for such services may fall within the provision’s requirements. This statutory exception should be distinguished from the general definition of consideration under Section 2(d).

The Position under English Law

The general rule under English common law is that past consideration is not good consideration. If an act was completed before a promise was made, the later promise is ordinarily treated as a gratuitous undertaking rather than a promise supported by a contractual exchange.

In Roscorla v Thomas (1842) 3 QB 234, a seller made a promise about the condition of a horse after the sale had already taken place. The promise was unenforceable because the buyer’s payment had already been made and could not serve as fresh consideration for the later promise.

In Eastwood v Kenyon (1840) 11 A & E 438, a guardian had incurred expenses benefiting his ward. The ward’s later promise to repay the money was held unenforceable because the benefit had already been conferred. A moral obligation to reimburse the guardian was not, by itself, sufficient consideration.

Similarly, in Re McArdle [1951] Ch 669, work had been completed on a property before the beneficiaries promised to reimburse the person who carried it out. The later promise was held unenforceable because the work preceded the promise.

These decisions demonstrate the general English approach: an act already completed will not ordinarily support a later promise unless an established exception applies.

The Exception to the English Rule: Lampleigh v Brathwait

English law recognises a limited exception to the general rule on past consideration. In Lampleigh v Brathwait (1615) Hob 105, the principle developed that a later promise may be enforceable where an earlier act was performed at the promisor’s request in circumstances indicating that the act would be rewarded.

The modern formulation appears in Pao On v Lau Yiu Long [1980] AC 614 (Privy Council). The exception applies where three conditions are satisfied: the act was performed at the promisor’s request; the parties understood that the act would be rewarded by payment or another benefit; and the payment would have been legally enforceable if it had been promised in advance.

In Re Casey’s Patents [1892] 1 Ch 104, services had been rendered in connection with the exploitation of patents, and a later promise to provide a share in the patents was held enforceable in the circumstances. The case illustrates how an earlier act and a later promise may be treated as parts of a single transaction where the relevant requirements are met.

The distinction is therefore not simply whether the act occurred before the promise. Under the English exception, the court also examines whether the act was requested and whether the parties understood that it would be rewarded.

4. Statutory Rules on Past Consideration: Time-Barred Debts and Negotiable Instruments

Two additional statutory provisions are relevant when studying promises connected with past obligations.

Section 25(3) of the Indian Contract Act, 1872 recognises a written and signed promise to pay a debt that could have been enforced but for the law of limitation. Such a promise may be enforceable even without fresh consideration, provided the statutory requirements are satisfied.

The Negotiable Instruments Act, 1881 also contains rules concerning consideration for negotiable instruments. The source material notes that a negotiable instrument is presumed to have been made for consideration and that a past debt may support a fresh promise to pay. These rules should be studied separately from the general classification of consideration under Section 2(d).

5. Difference Between Executed, Executory and Past Consideration

The most reliable way to distinguish the three categories is to examine the sequence of the promise and the act.

Basis	Executed consideration	Executory consideration	Past consideration
Timing	Act is performed in response to a promise	Promises are exchanged before performance	Act is completed before the relevant promise
Nature	Performance is the consideration	Each promise supports the other	Earlier act is relied upon to support a later promise
Typical contract	Unilateral contract	Bilateral contract	Not a separate type of contract
Obligations after the exchange	The performing party has completed the required act	Both parties may still have to perform	The later promise is enforceable only if the applicable legal requirements are met
Indian law	Generally recognised	Generally recognised	Recognised where the requirements of law are satisfied
English law	Generally recognised	Generally recognised	Generally not recognised, subject to the limited exception for acts requested and understood to be rewarded

6. Executed vs Past Consideration: The Difference Students Often Miss

Executed and past consideration are frequently confused because both involve an act that has been performed. The difference lies in whether the act was performed in response to the promise or before the promise was made.

Consider two situations.

In the first, A announces a reward for the return of a lost dog. B finds the dog after learning about the reward and returns it. B performs the act in response to A’s promise. This is executed consideration.

In the second, B finds and returns A’s dog without knowing about any reward. Only afterwards does A promise to pay B ₹1,000. B’s act preceded the promise, so it is past consideration in relation to that later promise. Whether A’s promise is enforceable must then be assessed under the applicable legal rules.

This distinction is particularly useful in problem questions. Rather than looking only at whether an act has been completed, identify when the promise was made and whether the act was performed at the promisor’s desire.

7. Problem Question: Can a Promise to Pay for Past Help Be Enforced?

Facts: Ravi helps Meera move her furniture on Saturday without being asked. On Monday, Meera promises to pay him ₹2,000 for his help. She subsequently refuses to pay.

Issue: Can Ravi enforce Meera’s promise?

Under Indian law: Ravi’s help was completed before Meera made the promise, so the consideration is past in relation to that promise. The fact that the work occurred earlier does not, by itself, make the promise unenforceable. However, the general rule in Section 2(d) requires the act to have been done at the desire of the promisor. Since Ravi acted without being asked, this requirement may be difficult to establish. Ravi may also consider Section 25(2), which deals with promises to compensate for past voluntary services. Whether that provision applies depends on its statutory requirements and the circumstances.

Under English law: The promise would ordinarily be unenforceable on these facts. Ravi acted voluntarily, without a prior request or an understanding that he would be rewarded. The exception explained in Lampleigh v Brathwait and Pao On v Lau Yiu Long would therefore not ordinarily apply.

What changes the result? If Meera had requested Ravi’s help in circumstances where both understood that the work would be paid for, a subsequent promise might be enforceable under the relevant rules. The outcome would depend on the evidence and the applicable legal requirements.

Frequently Asked Questions

Is past consideration valid under the Indian Contract Act, 1872?

Yes. Section 2(d) includes acts already performed at the desire of the promisor. Section 25(2) also provides a specific exception for qualifying promises to compensate for past voluntary services.

Is past consideration valid under English law?

Generally, no. An act completed before the promise is ordinarily insufficient consideration. A limited exception may apply where the act was requested, the parties understood it would be rewarded, and the payment would have been enforceable if promised in advance.

What is the difference between executed and executory consideration?

Executed consideration involves an act performed in response to a promise. Executory consideration involves promises exchanged between parties, with performance to take place in the future.

Which section defines consideration under Indian law?

Section 2(d) of the Indian Contract Act, 1872 defines consideration. Section 2(f) addresses reciprocal promises, while Section 25 identifies circumstances in which certain agreements without consideration may nevertheless be valid.

Conclusion

Executed, executory and past consideration are distinguished primarily by the timing of performance in relation to a promise. Executed consideration involves performance in response to an offer, executory consideration involves promises to perform in the future, and past consideration involves an act completed before the relevant promise.

For Indian contract law, Section 2(d) is the starting point because it expressly accommodates acts already done, acts being done and promises to act. English law generally recognises executed and executory consideration but treats past consideration more restrictively, subject to a limited exception. Applying these distinctions to the facts of a problem question is often more important than simply memorising the definitions.

References

Statutes

The Indian Contract Act, 1872 (Act No. 9 of 1872), Sections 2(d), 2(e), 2(f) and 25. Read the Act — Institute of Company Secretaries of India (PDF).

The Negotiable Instruments Act, 1881.

Cases

• Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
• Durga Prasad v Baldeo (1880) ILR 3 All 221.
• Eastwood v Kenyon (1840) 11 A & E 438.
• Kedar Nath Bhattacharji v Gorie Mohamed (1886) ILR 14 Cal 64.
• Lampleigh v Brathwait (1615) Hob 105.
• Pao On v Lau Yiu Long [1980] AC 614 (Privy Council).
• Re Casey’s Patents [1892] 1 Ch 104.
• Re McArdle [1951] Ch 669.
• Roscorla v Thomas (1842) 3 QB 234.

Books and Secondary Sources

• Pollock & Mulla, Indian Contract and Specific Relief Acts (LexisNexis), commentary on Sections 2(d) and 25.
• Avtar Singh, Law of Contract and Specific Relief (Eastern Book Company), chapter on consideration.
• Treitel, The Law of Contract (Sweet & Maxwell), section on past consideration.
• Chitty on Contracts (Sweet & Maxwell), chapter on consideration.
• iPleaders, Role of Consideration under Indian Contract Law