General Rule: Notes: Exceptions To General Rule

Exceptions to General Rule

Section 26 of the Contracts Act 1950 states that an agreement without consideration is void. However, there are several exceptions to this rule under s. 26 (a) (b) & (c).

The first exception is an agreement made on account of natural love and affection between parties standing in a near relation to each other. Such agreements must be made in writing and must be registered under the law (if any) for the time being in force for the registration of such documents.

The illustration of s. 26 (a) provided in Contract Act 1950:

‘A, for natural love and affection, promises to give his son, B, $1,000. A puts his promise to B in writing and registers it under a law for the time being in force for the registration of such

26(a) of the Contracts Act 1950. Under s. 26(a) an agreement without consideration is void unless expressed in writing and registered under the law and also made for ‘natural love and affection’ by parties ‘standing in a near relation to each other’. P and D were biological brothers and thus clearly ‘standing in a near relation to each other’ The family arrangements had been reduced to writing and had been duly stamped and registered with the endorsement by the Stamp Office. As such the family arrangements fulfill all the requirements of s. 26(a) of the Act and were valid and enforceable.

It was also the considered opinion of the court that in the case of the natural parents and their children, a presumption of natural love and affection arises so that a valid consideration is constituted in law for the purposes of s 26(a).

The second exception is a promise to compensate for something done. 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. The necessary elements of this exception are the promisee has voluntarily done an act; the act is one that the promisor was legally compellable to do; and the promisor has agreed to compensate wholly or in part the promisee for the

26(2) of the Limitation Act 1953 provides that where any right of action has accrued to recover any debt or other liquidated pecuniary claim and the person liable or accountable therefore acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment.The acknowledgement shall be in writing and signed by the person making the acknowledgement - S. 27(1) of the Limitation Act 1953. If the debtor settles a part of his debt, then the limitation period would begin to run from the date of the last payment of his