A finds B's purse and gives it to him. B promises to give A Rs. 500. Can A institute suit to acquire money from B?

Yes, A can successfully institute a suit against B to recover the Rs. 500, and A will succeed. The situation falls squarely within the second exception to Section 25 of the Indian Contract Act, 1872, which validates a promise to compensate a person who has already voluntarily done something for the promisor — even though no consideration existed at the time of the act.

The General Rule and Its Problem

The cardinal principle of Indian contract law is that an agreement without consideration is void. Section 25 declares this in unambiguous terms. At first glance, the transaction described here appears to be in trouble. A found B's purse and returned it before any promise was made. B's promise to pay came afterwards — as an expression of gratitude for a wholly past act. Under English common law, this would have been a fatal defect. As stated clearly, past consideration is no consideration at all — it is merely a sentiment of gratitude, a motive for the promise perhaps, but not its legal foundation. English courts took the strict view that the consideration and the promise must go together, and a promise to reward a wholly past voluntary act was unenforceable.

The Indian Exception: Section 25(2)

Indian law deliberately departed from this English position. Section 25(2) of the Indian Contract Act provides that an agreement made without consideration is not void if it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor. The legislature, in its wisdom, recognised that a person who spontaneously renders a service to another — out of honesty or goodwill, without any request or promise — deserves legal protection when the beneficiary subsequently acknowledges the obligation by making a promise of recompense.

The Act itself supplies the very illustration that mirrors this problem. Illustration (c) to Section 25 reads: "A finds B's purse and gives it to him. B promises to give A Rs 50. This is a contract." The amount in the problem is different — Rs. 500 instead of Rs. 50 — but the legal position is identical. The illustration is the law speaking by example.

Conditions for the Exception to Apply

Three conditions must be satisfied before Section 25(2) can be invoked:

• The act must have been done voluntarily — that is, by the free will, impulse, and choice of the person, and not under any constraint, prompting, or suggestion of the promisor.

• The act must have been done for the promisor — a person who was in existence and competent to contract at the time.

• There must be a promise to compensate for that act — the promisor must have acknowledged the act and made a promise to recompense it, wholly or in part.

All three conditions are satisfied here. A found the purse voluntarily — no one asked A to find it, and no reward was promised beforehand. The act was done for B, who was in existence and competent to contract. B, upon receiving his purse, made an express promise to pay A Rs. 500. The agreement is therefore a valid contract, and B is bound by it.

The Voluntary Character of the Act

The word "voluntarily" in Section 25(2) is crucial. It means the act was performed of the actor's own free will, impulse, and choice — not under any constraint or at the direction of another. This is what distinguishes Section 25(2) from the ordinary definition of consideration under Section 2(d), which requires that the act be done "at the desire of the promisor." Under Section 25(2), the very absence of a prior request is what makes the act voluntary, and it is precisely this voluntary character that the law chooses to protect and reward.

The Contrast with English Law: Why India Differs

It is instructive to contrast this with the English position to appreciate the significance of this provision. In England, if A saves B from drowning and B later promises a reward, A cannot enforce that promise, for As action is past consideration and past consideration is no consideration. The English courts in Roscorla v Thomas (1842 3 QB 234) reiterated this rigidly: a promise subsequent to an act and independent of it cannot be enforced.

Indian law has consciously refused to follow this path. The legislature took the view — a sound and humane one — that a person who has conferred a genuine benefit on another, though without any prior obligation to do so, acquires a moral claim which, when acknowledged by a subsequent promise, ought to have legal force. Section 25(2) converts that moral claim into a legal right.

Other Illustrations of the Same Principle

The courts have applied this principle consistently across a variety of factual situations. In the celebrated Bombay High Court decision in Sindha Shri Ganpatsingji v. Abraham (ILR 1896 20 Bom 755), the court held that services rendered to a person — even during his minority and continued after majority — at his request constituted good consideration for his subsequent promise to pay. The court affirmed that a promise to compensate for past services voluntarily rendered is perfectly enforceable.

Similarly, another well-recognised illustration under the same provision is: "A supports B's infant son. B promises to pay A's expenses in so doing. This is a contract." Here again, A acted without any prior request or promise, yet B's subsequent promise is legally binding.

The Conclusion

A can successfully institute a suit against B and will recover Rs. 500. B's promise, though made after the act of returning the purse, is saved from invalidity by Section 25(2) of the Indian Contract Act. It is not merely a moral gesture — it is a binding contract. The Act's own illustration makes this beyond doubt, and Indian courts have consistently upheld such promises as enforceable contracts, recognising that the law must honour not just formal bargains, but also spontaneous acts of honesty and goodwill that the promisor himself has seen fit to acknowledge with a promise. To hold otherwise would be to allow B to benefit from A's honest conduct and then escape the obligation he voluntarily undertook — a result that neither law nor conscience would sanction.