Validity of Past Consideration in Guarantee Contracts

  • Aayush Khandekar
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  • Aayush Khandekar

    Student at Symbiosis Law School, Pune, India

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The contract law of India came into existence in 1872 and yet there are provisions that are still contentious and need clarification given the advancing economy of the world. One of the contentious topics is the validity of past consideration in guarantee contracts. Guarantee contracts are a part of everyday business and is a way for creditors to make sure they get their credited amount back on time. The dispute in Section 127 of the Indian Contract Act which defines the consideration for a guarantee contract has been going on for years and different courts have given different interpretations of whether past consideration should be valid. With the Supreme Court recently opining that it should be valid while deciding a case, there is finally some direction the Indian courts can use to give the future judgements and develop the jurisprudence on this subject. The validity of past consideration has been upheld in other common law countries as well by using innovative ways to get around the textual barrier of the law as it achieves the objective of the contract which has also been discussed in the article.


Research Paper


International Journal of Law Management and Humanities, Volume 4, Issue 3, Page 2282 - 2287


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