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According to Section 23 of the Indian Contract Act, “an agreement of which the object or consideration is unlawful is void.” Both the object and the consideration of agreement must be lawful otherwise the agreement would be void.
The consideration or the object of an agreement is unlawful in the following cases:
1. If it is forbidden by Law: If the consideration or object for a promise is such as is forbidden by law, the agreement is void. Section 26, 27, 28 and 30 of the Contract Act deals with cases where the consideration or object of an agreement is considered unlawful.
An act or an undertaking is forbidden by law:
i) When it is punishable by criminal law of the country or
ii) When it is prohibited by special legislation or regulations made by a competent authority under powers derived from the legislature.
For example: An agreement to pay consideration to a tenant to induce him to vacate premises governed by the Rent Restriction Act is illegal and cannot be enforced because such an act is forbidden by the said Act. (Mohanchana vs. Manindra (1955))
2. It is of such a nature that if permitted it would defeat the provisions of any law: If the object or consideration of an agreement is of such a nature that if permitted it would defeat the provisions of any law, the agreement is void.
For example: An agreement to give an annual allowance to the parent of an adopted Hindu boy in order to induce them to consent to the adoption is void.
3. If it is fraudulent: Agreements which are entered into to promote fraud are void.
For example: An agreement for the sale of goods for the purpose of smuggling them out of the country is void and the price of the goods so sold, cannot be recovered.
4. If it involves or implies injury to the person or property of another: The object or consideration of an agreement will be unlawful if it tends to injure the person or property of another.
For example: ‘A’ asks an editor of a newspaper to publish a defamatory article against ‘B’ and promises to pay Rs. 4,000 for the work. The agreement is void as it involves injury to the person of ‘B’ and therefore, a suit cannot be brought to recover Rs. 4,000 by the editor.
5. If the court regards it as immoral: The word immoral means inconsistent with what is right. The object or consideration which is immoral is void.
For example: ‘A’s advances money to ‘B’ for obtaining divorce from her husband, is void.
6. If the court regards it as being opposed to public policy: If any Agreement which tends to promote corruption or injustice or is against the interest of the public is considered to be opposed to public policy.
The consideration or the object of an agreement is unlawful in the following cases:
1. If it is forbidden by Law: If the consideration or object for a promise is such as is forbidden by law, the agreement is void. Section 26, 27, 28 and 30 of the Contract Act deals with cases where the consideration or object of an agreement is considered unlawful.
An act or an undertaking is forbidden by law:
i) When it is punishable by criminal law of the country or
ii) When it is prohibited by special legislation or regulations made by a competent authority under powers derived from the legislature.
For example: An agreement to pay consideration to a tenant to induce him to vacate premises governed by the Rent Restriction Act is illegal and cannot be enforced because such an act is forbidden by the said Act. (Mohanchana vs. Manindra (1955))
2. It is of such a nature that if permitted it would defeat the provisions of any law: If the object or consideration of an agreement is of such a nature that if permitted it would defeat the provisions of any law, the agreement is void.
For example: An agreement to give an annual allowance to the parent of an adopted Hindu boy in order to induce them to consent to the adoption is void.
3. If it is fraudulent: Agreements which are entered into to promote fraud are void.
For example: An agreement for the sale of goods for the purpose of smuggling them out of the country is void and the price of the goods so sold, cannot be recovered.
4. If it involves or implies injury to the person or property of another: The object or consideration of an agreement will be unlawful if it tends to injure the person or property of another.
For example: ‘A’ asks an editor of a newspaper to publish a defamatory article against ‘B’ and promises to pay Rs. 4,000 for the work. The agreement is void as it involves injury to the person of ‘B’ and therefore, a suit cannot be brought to recover Rs. 4,000 by the editor.
5. If the court regards it as immoral: The word immoral means inconsistent with what is right. The object or consideration which is immoral is void.
For example: ‘A’s advances money to ‘B’ for obtaining divorce from her husband, is void.
6. If the court regards it as being opposed to public policy: If any Agreement which tends to promote corruption or injustice or is against the interest of the public is considered to be opposed to public policy.
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