Lawful object.

An overview.

Compiled by:
Sujata Kundu
PGDM/10/029
1st year.
Management
House.
I.E.M
Saltlake,
Acknowledgement.

Great Aristotle once said “law is itself passion free”-no offence, but in my few
days of existence this simply seems impossible!

Of course I’m no “scholar” and with the little knowledge that I have gathered, it
seems most unlikely to perform the task marvelously without having a passion for
it. Be it a Chef, a teacher or for the matter of fact lawyer, everyone some-how has
passion for what he does or preaches. A lawyer has ample “passion” for what
he/she fights for! Most lawyer fight for what they feel is “lawfully object”.

I am very grateful to my teacher for giving me the opportunity to do research in

the topic that I believe in.

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Content.

Srl. no Particular Page no.

1. Introduction. 04

2. Agreement & Contract. 05

3. Lawful object. 07

4. Unlawful object. 08

5. Object Unlawful in part. 16

6. Conclusion. 17

7. Bibliography & Webliography. 18

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Introduction.

For the formation of a valid contract it is also necessary that the parties to an
agreement must agree for a lawful object. The object for which the agreement
has been entered into must not be fraudulent or illegal or immoral or opposed
to public policy or must not imply injury to the person or the other of the reasons
mentioned above the agreement is void. Thus, when a landlord knowingly lets a
house to a prostitute to carry on prostitution, he cannot recover the rent through
a court of law or a contract for committing a murder is a void contract and
unenforceable by law.

But before lawful object can be discussed in detail, one must be clear with the
terms “AGREEMENT and CONTRACT”.

Agreement & Contract.

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Contract:

A contract is an agreement, enforceable by law, made between at least two

parties by which rights are acquired by one and obligations are created on the
part of the another.

Section 2(h) defines contracts as “an agreement enforceable by law”. Thus, a

contract essentially consists of two elements:

1. An agreement and
2. Its enforceability by law.

 An agreement is an offer and its acceptance.  An agreement which can be
enforceable by law must have some essential elements. According to Section
10 "All agreements are contracts if they are made by the free consent
of the parties competent to contract, for a lawful consideration and
with a lawful object, and are not hereby expressly declared to be
void" As per the above section, a contract must have the following elements.

1.  Intention to create legal relationship.

2.  Lawful object
3.  Agreement not expressly declared void
4.  Proper offer and it s acceptance
5.  Free Consent
6.  Capacity of parties to contract
7.  Certainty of meaning.
8.  Possibility of performance.
9.  Lawful consideration
10.  Legal formalities

Agreement:

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Section 2(e) defines agreement as “every promise and every sect of promises
forming consideration for each other”.

According to Section 2(b) a proposal, when accepted becomes a “promise”.

The person making the proposal is called the “promisor” and the person accepting
the proposal is called the “promise”[s. 2(c)] .

Traditionally

1.    An agreement will not be enforced by the court if its object or the
consideration is unlawful. By the expression “Object of an Agreement” is meant
its purpose on design. The object and the consideration must both be lawful,
otherwise the agreement is void.     

2.    The object or consideration of an agreement must be lawful. In order to make

the agreement, a valid contract, for, Section 10 lays down that all agreements are
contracts if made for lawful consideration and with a lawful object. Section 23
declares what kinds of consideration and objects are not lawful. If the object or
consideration is unlawful for one or the other of the reasons mentioned in Section
23, the agreement is illegal and therefore void (Section 23).  

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Lawful Object.

Literally

The word ‘Lawful’ means ‘the state of being legal’   ‘Object’ means ‘purpose’.  
So the meaning of lawful object is the state of being any purpose legal. 

The object of agreement must be lawful i.e. the object should not be

1) Illegal

2) Immoral or

3) Opposed to public policy.

All contracts to be valid, need to fulfill the criterion of lawful object. But one must
be vigilant with the various points of Unlawful Object.

There are even Objects that are partially Unlawful. All the points are assimilated
below.

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UNLAWFUL OBJECT

1.    If it is forbidden by law-

If the consideration or the object of a contract were forbidden by law, it would be
unlawful and hence unenforceable.
Example-
a)    A promises to pay B Rs.1000 at the end of six months, if C, who owes that
sum of B, fails to pay it. B promises to grant time to C accordingly. Here the
promise of each party is a consideration for the promise of the other party, and
they are lawful considerations.

b)    Promises for a certain sum paid to him by B, to make good to be the value of
his ship wrecked on a certain voyage. Here A’s promise is the consideration for B’s
payment and B’s payment is consideration for A’s promise. These are lawful
consideration.

Case-
a)    An agreement to sublet a license to sell grass issued under the Madras Abkari
Act 1886 would not be enforceable, because the object of the Act is the
protection of the public as well as the revenue. Thithi Pkurudsu vs Bheemudu,
(1902) 26 Mad. 930. 

b)    Where a license to cut grass was given by the Forest Dept. and one of the
terms of the license was that the licensee should not assign his interest on the
license without the permission of the Forest Officer, and a fine was prescribed for
a breach of this condition, it was held that there being nothing in the Forest Act to
make it obligatory upon the parties to observe the conditions of the license the
assignment would be binding upon the parties, though it was competent to the
Forest Officer to revoke the license if he thought fit to do so. It was so held
because the Act did not forbid the transaction but merely imposed a condition for
administrative purpose. Nazarali v. Baba Miya (1916) 40 Bom. 64.  

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2.      If it were permitted, it would defeat the provisions of any law
The consideration of an agreement would be unlawful if it is of such nature that if
permitted, would defeat the provisions of any law. (Section 23) 
 
Case-
a)    P let a flat to R of $1200 a year. To reduce the municipal tax he entered into
two agreements with R. One, by which the rent was stated to be $450 only and
the other by which R agreed to pay $750 for services in connection with the flat.
In a suit filed against R to recover $750, it was held that the agreement was made
to defraud the municipal authority and was void and A cannot recover the money.
Alexander v. Rayson.

b)    A trading partnership consisted of more than 20 persons and it was not
registered rendering it an illegal association. A suit was brought for its dissolution.
It was held that the suit would not lie for it would defeat the provisions of the
Companies Act. Mewa Ram v. Ram Gopal, (1926) 48 all, 735.  

c)    An agreement buy the debtor not to raise the plea of limitation, should a suit
have to be filed, is void as tending to limit the provisions of the Limitation Act
(Rama Murthy vs. Gopayya).  

3.      If it is fraudulent
an agreement, whose object or consideration is to fraud others, is unlawful and
hence void. 

Example-
a)    A being agent for a landed proprietor, agrees for money, without the
knowledge of his principal, to obtain from B a lease of land belonging to his
principal. The agreement between A and B is void, as it implies a fraud by
concealment by A on his principal to obtain for B a lease of land belonging to his
principal. 

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Case-
a)    A, B and C enter into an agreement for the division among them of gains
acquired, or to be acquired, by them by fraud. The agreement is void, as its object
is unlawful. [Illustration (e) to section 23].  

b)    Where the object of an agreement between A and B was to obtain a contract
from the commissariat department for the benefit of court , which could not be
obtained for both of them without practicing fraud on the department, it was
held that the object of the agreement was fraudulent, and that the agreement
was therefore void. Shaib Ram Vs Nagar Mel, (1884) Punj. Record no 63.

4.     If it involves or implies injury to the person or property of another 

An agreement, the consideration of which is the causing of an injury to a person
or property of another, is void.[Section-23] Injury means criminal or wrongful
harm.

Case-
a)    An agreement by the proprietor of newspaper to indemnify the printers
against claims arising from libel printed in the newspaper is void. W.H. Smith &
Sons v. Clinton 

b)    A bond, which compels the executants to daily attendance and manual labor
until a certain sum is repaid in a certain month and penalizes default with
overwhelming interest, is unlawful and void. Ram sarup v. Bansi Mudar , (1915)
42 Cal 742 

5.     If the court regard it as immoral

an agreement, the consideration of which is immoral, is void. (Section 23). The
scope of the word immoral here extend to the following:

i)     Sexual immorality e.g. illicit cohabitation or concubinage or prostitution.

Case-
a)    A agrees to let her daughter to hire to B for concubinage. The agreement is
void, because it is immoral, though the letting may not be punishable under the
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Indian Penal Code [illustration (k)to section 23] 

b)    A gift deed executed in consideration of illicit has been held void, as its object
is immoral. Ghumma v. Ram Chandra (1926), 47 All. 619.  

      ii)    Furtherance of sexual immorality.

            
Case-
A man who knowing lets out his house for prostitution cannot recover the rent, it
being an act for furtherance of sexual immorality (Choga Lal v. Piyasi). The
landlord may, however, recover if he did not know the purpose.

      iii)    Interference with marital relation       

Case- 
Money advanced to a married woman to enable her to procure and to marry the
plaintiff could not be recovered back as the object of the agreement was held
immoral(Bai Vijli v. Nansa Nagar).  

iv)    Such acts which are against good public morals.

Case-
a)    An agreement for future marriage, after death of first wife is against good
public morals and hence would be void. Wilson v. Cornley (1908), 1 K.B. 729

b)    A, who is B’s mukhtar, promises to exercise his influence, as such with B in
favor of C and C promises to pay Rs.1000 to A. The agreement is void because it is
immoral. [Illustration (j) to section 23]  

6.    If the court regards it as ‘opposed to public policy’

If the court regards the object or consideration of an agreement as opposed to
public policy, the agreement is void (Section 23).

The following agreements are considered to be against the public policy.

i)    Trading with an alien enemy:

All trades with public enemies without a license from the government are

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unlawful. It is now fully established that trading with an alien enemy (i.e. a citizen
of the other country at war with the state) is against public policy in so far as it
tends to aid the economy of the enemy country. Such agreement is illegal.

ii)   Agreements for stifling criminal prosecution:

It is well-settled law that if a person has committed a crime, he must be punished.
Hence any agreement, which seeks to prevent the prosecution of a guilty party is
opposed to public policy and is void, for ‘no one can be allowed to make a trade
of felony’. Agreement for stifling prosecution cannot be enforced.
     
Example-
Where the offence is non-compoundable as where the charge is one of criminal
breach of trust and the offence is compounded by the accused passing a bond to
the complaint, the latter cannot recover the amount of the bond.
            
Case-
Where A agreed to execute a kabala of certain lands in favor of B in consideration
of B abstaining A with respect to an offence of simple assault which is
compoundable, it was held that the contract was not against public policy and
could be enforced. Amir Khan v. Amir Jan (1898) 3 C. W. N.  5.  
    
 
iii)        Agreement interfering with the course of justice:
An agreement for the purpose of using improper influence with judges is void.

Example-
An agreement not to disclose misconduct to the other interested party or an
agreement to influence a judge to induce him to decide the case in a party’s
favor, is obviously opposed to the public policy and is void.

Case-
An agreement to pay a fee to a holy man for prayers for the success of a suit is
not an interference with the course of justice. Balasundra Mudaliar v. Mohamed
Ossman, (1930) 53 Mad. 29; 57 Mad.L.J. 154.  

     
iv)    Champerty and maintenance:

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Maintenance is an agreement made by a disinterested party for litigation. It is a
valid agreement. Champerty is an agreement made by a person to help a party to
litigation, provided that the party receiving help promises to share the fruits of
the litigation in the event of a favorable decision obtained by him in the suit.
 
Case
a contract to assist litigant so as to delay the execution of a decree against him is
opposed to public policy and cannot be enforced. Nand Kishor vs Kunz Behari,
(1933) All. L. J. 85.  

v)         Traffic in Public Offices:

Agreements for sale or transfer of Public Offices or for appointments for Public
Offices in consideration of money are illegal, being opposed to public policy. Such
agreements, if enforced, would lead to inefficiency and corruption in public life. 

Case-
a)    An agreement to procure Knighthood made to a charity is void. Parkinson v.
College of Ambulance Ltd. (1925)  
b)    the priests of a public temple agreed to share the offerings made to the deity.
It was held that their arrangement was not against public policy. Kallu v.
Rajinder(1922).  
c)    If A pays money to B who promises to use his influence and to secure A’s son
and appointment in the public service, A cannot recover the money if his son does
secure the appointment. Ledu v. Hira Lal, (1916) 43 Calcutta 115.

 vi)         Agreements creating an interest opposed to duty:

If a person enters into a contract with a public servant, which to knowledge might
cast upon the public service obligations inconsistent with the public duty, the
agreement is void.

Case-
a)    An agreement is not to report in newspaper the activities of a public
personality is a void agreement. Similarly, if a lawyer wants to create an interest,
which will encourage him to perform his duties indifferently, the agreement shall
be void. Nevile v. Dominion of Canada News Co(1915)  

b)    An agreement by an agent with a third party whereby he would be enabled

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to make secret profits is illegal and void, as it tends to create a conflict between
interest and duty.

vii)    Agreement opposed to parental duty:

The authority of a father over children and a guardian of a ward is to be exercised
in the interest of the children and the ward respectively. The authority of a father
cannot be alienated irrevocably and any agreement purporting to do so is void.

Case-
a)    Where the adopting father promises money to the natural father in return for
adoption of the latter’s son, such promise is void. Sitaram v.Harihur(1915)  .

b)    The father of two minor sons agreed to transfer their guardianship to Mrs.
Annie Besant, on an irrevocable basis. Subsequently he wanted to rescind the
agreement. Held their guardianship cannot be permanently alienated. So he got
back their custody. Giddu Narayanish vs Mrs. Annie Besant.  

viii)    Marriage brokerage agreement:

According to English Law an agreement to pay brokerage to a person for
negotiating a marriage, is void because it is against public policy. The principal
underlying this rule is that marriages should take place according to the free
choice of parties and such choice should not be interfered with by third parties
acting as brokers. 

Bakshi vs Nadu Das (1902).. (i) Gifts made to the groom or the bride are valid
transactions. (ii) Gifts made can be claimed back if the match fails.(iii) A promise
to give a marriage in ret6urn for money is a void promise. (iv) A promise to
remunerate the broker is void.  

Case 
a)    An agreement to pay money to the parent or guardian of a minor in
consideration of his consenting to give the minor in marriage is void as being
opposed to the public policy. Dholidas vs Furchand, (1897) 22 Bom. 658.  
b)    An agreement to pay a penalty in case a minor daughter is not given in
marriage to a particular person is void. Devarayan vs Muthuvaman, (1914) 37
Mad. 393.  

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ix)    Agreement tending to create monopolies in trade:
Agreements having for their object, the creation of monopolies are void as
opposed to the public policy. Somu Pillai vs MC Mayaveran, (1905) 28 Mad. 520.  

x)    Agreement to defraud revenue authority:

Agreements to defraud revenue authorities are void and illegal. 

Case
An agreement by which an employee was to get, in addition to salary, an expense
allowance grossly in excess of the expenses actually incurred by him, was held
illegal because the provision as to expenses was contrary to public policy being
merely a device to defraud the Income Tax authorities. Napeier vs National
Business Agency Ltd. (1951). 2 All. ER. 264.  

xi)    Agreement to give evidence:

Agreements whereby money is given to induce persons to give evidences in a civil
port are void because everyone is expected to perform his legal duty. Adhiraja
Shatty vs Vittil Bhatta AIR (1914). Mad. 366  

xii)    Agreement against personal freedom:

Agreement which unduly restrict personal freedom have been held to be void and
illegal as being against public policy.
            
Case
When a debtor promises not to change his residence till repayment of a loan is
complete, such promise is void.  Harwood vs Millers Timber & Trading Co. (1917),
1KB 305.   

xiii)    Agreement opposed to marital duties:

Agreement, which interferes with the performance of marital duties, is void as
being against public policy. 
     

OBJECT UNLAWFUL IN PART.

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1.    If any part of a single consideration for one or more objects, or any one or any
part of any one or several considerations for a single object, is unlawful, the
agreement is void.

Example-
A promises to superintend, on behalf of B, a legal manufacture of indigo; and an
illegal traffic in other articles. B promises to pay A salary of 10000 rupees a year.
The agreement is void, the object of A’s promise and the consideration for B’s
promise is in part unlawful. (Illustration to section 24).
      
Case-
A agrees to serve B as his housekeeper and also to leave the adultery with him at
a fixed salary. The whole agreement is unlawful and void. A cannot sue even for
service rendered as housekeeper because it cannot be ascertained as to what was
due on account of adulterous intercourse and what was due for housekeeping.
Alice Mary Hill v. William Clarke,(1905), 27 All. 266   

2.    Where there reciprocal promise to do things legal and also other things
illegal, and the legal part can be separated from the illegal part (i.e. there is a
separate consideration for different promises), the legal part is a contract and the
illegal part is avoid agreement. (Section 57). 

Example-
A and B agree that A shall sell B a house for Rs.10000 but if B uses it as a gambling
house, he shall pay a Rs. 50000 for it. The first part of the agreement is valid and
the second part is invalid. 

3.    In the case of alternative promise, one branch of which is legal and the other
illegal, the legal branch alone can be enforced. (Section 58)

Example-
A and B agree that, A shall pay Rs.1000 for which B shall afterwards deliver to A,
either rice or smuggled opium. This is a valid contract to deliver rice and a void
agreement as to opium.

Conclusion.
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The objective of the agreement must be lawful.

Any act prohibited by law will not be valid and such agreements cannot be
treated as a valid contract.

A rents out his house for the business of prostitution or for making bomb, the
acts performing there are unlawful. Hence such agreement cannot be treated
as a valid contract. Therefore the consideration as well as the object of
the agreement should be lawful.

Lawful object is an important element for a valid contract. Every valid

contract must fulfill this criterion.

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Bibliography & Webliography.
The various sources of information are enlisted below:

 Mercantile law by S.S Gulshan.

 www.Hubpages.com

 www.reportbd.com

 www.xomba.com

 www.citiman.com

 WWW .SCRIB .COM

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