RESEARCH OBJECTIVE

RESEARCH QUESTION

The illegality doctrine relates to contracts which are illegal or contrary to public policy (hereafter ‘illegal
contracts’). Contracts may be tainted because:

• making such contracts is itself prohibited, or

• more usually, because its means (the method of performance) is illegal; or

• the contract’s ends (purposes) are illegal.

Contracts which become illegal by changes in the law subsequent to formation are dealt with by the
doctrine of frustration. On one view, the illegality doctrine represents the most open and direct
interference with contract parties’ freedom to determine the substance of their contracts. An
alternative view is that it designates the class of ‘unworthy’ contracts to which the law will not lend its
support or force.

Sir William Holdsworth said:1

[A] body of law like the common law, which has grown up gradually with the growth of the nation,
necessarily acquires some fi xed principles, and if it is to maintain these principles it must be able, on the
ground of public policy or some other like ground, to suppress practices which, under ever new
disguises, seek to weaken or negative them.

Lord Mansfield explains in Holman v Johnson (1775) that courts will not assist one whose cause of action
is founded upon an immoral or an illegal act (‘ex dolo malo non oritur actio’). Thus, in general, although
not always, courts will refuse to enforce an illegal contract even though it meets all the requirements of
formation (Part I) and is otherwise untainted by any vitiating factor (Part III). Nor will it grant restitution
of any money or property transferred under it. For example, no remedy was given in:

• Parkinson v College of Ambulance Ltd (1925), where P ‘donated’ £3,000 to C on the promise of C’s
secretary to procure a knighthood for P which failed to eventuate,

• Pearce v Brooks (1866), where P hired out an ornamental carriage to B, a prostitute, for use in her
trade but which B returned in a damaged condition and refused topay for.

The case law is vast and the answers to these questions are far from simple. The first point to make is
that, although contracts are sometimes said to be ‘void’ for illegality or contravention of public policy,
this does not necessarily equate with contracts voidon other grounds (such as common mistake). Thus,
‘illegality’ will be used to refer to the whole range of cases where contract law denies a contract its
ordinary legal consequences because of some prohibition, breach of duty, or contravention of public
policy. We will see that the consequences of illegality vary according to factors such as:

• the nature and seriousness of the illegality,

• how far the contract was carried through,

• the parties’ states of mind, and

• the intricacies of certain property and trust law rules.

Statutory illegality

A contract may be illegal because its formation, purpose, or performance contravenes some statute or
the common law. It is diffi cult to generalise about the wide range of statutory prohibitions although
they are often designed to secure fair trading conditions,safeguard property and personal safety, and
prevent competitive markets from being undermined. Some examples are the prohibition on the
marketing or sale of certain knives (Restriction of Offensive Weapons Act 1959; Offensive Weapons Act
1996; Knives Act 1997) and the sale of body parts (Human Organ Transplants Act 1989). Many common
law illegalities (see W2.1.2) have become the subject of statutory control or prohibitions.

The relevant statute may stipulate different consequences. For example, it may

• expressly prohibit the making of the contract (courts are reluctant to imply a prohibition), barring
enforcement by or restitution to either party (Re Mahmoud and Ispahani (1921));

• permit enforcement by either party because the statutory intent is only to impose a penalty and not to
deny contractual enforcement (St John Shipping Corporation v Joseph Rank Ltd (1957)) Where statutes
are silent (as they often are) on the effect of the illegality on the contract while setting out the
administrative and penal sanctions, courts must decide the consequences on the same general
principles as are applicable to common law illegality

Mohamed v Alaga & Co (2000) involved an oral contract by M to introduce refugees to A (and act as
translator) in exchange for half the legal aid fees A could claim for work in respect of the refugee’s
immigration and asylum applications. The contract was unenforceable by reference to legislation2
preventing solicitors from sharing their fees. However, the Court of Appeal allowed M’s claim for
quantum meruit (the value of services) because the parties were not equally to blame. A had knowingly
disregarded

the professional conduct rules, while M had been unaware of any impropriety in the arrangement.
Section 335(1) Gambling Act 2005 states that ‘the fact that a contract relates to gambling shall not
prevent its enforcement’ provided that it is not otherwise unlawful (s 335(2)). This reverses the previous
bar on enforcement and restitution in respect of gaming and wagering contracts.
Common law illegality

With statutory illegality, courts discern and apply the conception of public policy contained therein.
However, where courts refuse to recognise a contract as contraveningpublic policy at common law, they
are vulnerable to the charges of:

• usurping the function of Parliament;

• giving effect to their subjective opinions on matters of morality and the public

good; and

• undermining the freedom, sanctity, and stability of contracts.

Burroughs J saw public policy as ‘a very unruly horse, and when once you get astride it you never know
where it will carry you’ (Richardson v Mellish (1824) at 252). Lord Denning’s (predictable) response is
that ‘with a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles.
It can leap the fences put up by fictions and come down on the side of justice’ (Enderby Town Football
Club Ltd v The Football Association Ltd (1970) at 1026).

The categories of public policy are often said to be closed. Characteristically, the picture presented is of
general respect for the sanctity of contract, subject to a series of exceptions established by clear
precedents. While it is still not open to courts to rejecta contract unless it falls within one of the well-
established ‘heads’ of illegality, courts have been willing to extend existing categories to refl ect
changing social and moral values.

As Dankwerts LJ said in Nagle v Feilden (1966 at 650): ‘[T]he law relating to public policy cannot remain
immutable. It must change with the passage of time. The wind of change blows upon it.’ Chitty
concludes (at [16–004]) that ‘the difference between sextending an existing principle as opposed to
creating a new one will often be waferthin’.

In a system of law which evolves (albeit gradually) like the common law, the

content of the public policy (which reinforces the law) cannot remain static, but must

change with the evolution of public opinion, morality, and legislative policies.

W2.2.3). Further, the scope of impermissible restraint of trade has been modifi ed in response to

changing economic conditions (see W2.1.2.9).

Writers disagree on how to categorise the ‘heads’ of public policy, but the differences are

largely of exposition rather than of substance. A detailed account of each category is not proposed

here (see further Treitel, para 11-002 to 11-004; Beatson, 348–95); the law of restraint of
trade, for example, fi lls whole books. What follows is a brief overview of the kinds of contracts

held at common law to contravene public policy.

Contracts to commit a crime

This is the most obvious category of illegal contracts. Examples include contracts

which:

• breach building licence regulations (Bostel Bros Ltd v Hurlock (1949));

• breach exchange controls (Bigos v Bousted (1951));

• defraud the revenue (Miller v Karlinski (1945));

• defraud the rating authority (Alexander v Rayson (1936)).

This public policy also taints any contract which:

• enriches someone for acting unlawfully (in Beresford v Royal Insurance Co Ltd (1938),

a person insured his own life for £50,000 and then committed suicide (then a

criminal offence); his estate could not claim although the policy expressly covered

suicide);

• although lawful in itself, is made to further a criminal or civil wrong (in Langton v

Hughes (1813), juices and spices were sold to be used illegally for fl avouring beer).

An offence committed in the course of an otherwise legal contract will not necessarily

taint the contract (see further W2.2).

W2.1.2.2 Contracts made for the deliberate commission of a civil wrong

Examples include contracts to:

• beat up another person (Allen v Rescous (1676));

• publish a libel (Clay v Yates (1856));

• perpetrate a fraud (Willis v Baldwin (1780));

• indemnify a person against loss resulting from his own deliberate criminal or tortious
act (Brown Jenkinson & Co Ltd v Percy Dalton (London) Ltd (1957)).

Contracts interfering with the administration of justice

Contracts which amount to a conspiracy to pervert the course of justice include

agreements:

• to stifl e a prosecution (R v Andreas Panayiotou (1973), for rape);

• to refrain from disclosing misconduct which ought to be disclosed to those with a

proper interest to receive it (Initial Services Ltd v Putterill (1968), unregistered pricefi

xing agreement, and see A-G v Guardian Newspapers Ltd (No 2) (1990);

• to give false evidence in criminal proceedings (R v Andrews (1973));

• to obstruct bankruptcy proceedings (Elliott v Richardson (1870));

• to ‘maintain’ or support litigation in which a party has no legitimate concern without

just cause or excuse (Hill v Archbold (1968)), although ‘just cause and excuse’

is now widely interpreted (Giles v Thompson (1993) at 328–33) to permit litigation

supported by unions or insurance companies;

• of ‘champerty’ (ie fi nancing another’s litigation with a view to taking a share in its

proceeds) which amounts to an aggravated form of maintenance (Giles v Thompson);

but s 58 Courts and Legal Services Act 1990 and s27 Access to Justice Act 1999 permit

certain ‘no win, no fee’ and other conditional fee agreements between lawyers

and their clients in the interest of increasing access to justice.

Contracts to oust the jurisdiction of the courts

It is contrary to public policy to deny the important constitutional principle of access to

the courts for redress against legal injuries. However, the law must balance this with the

competing interest of facilitating speedy, convenient, and affordable dispute resolution.

Thus, parties can agree not to resort to the courts until they have gone to arbitration

(Scott v Avery (1855)). Under the Arbitration Act 1996 (ss 45, 87), although parties can still

appeal to the courts on questions of law, the scope of judicial control is much reduced.

For example, an appeal requires both parties’ agreement or leave of the court, and parties

can exclude the court’s jurisdiction in ‘non-domestic arbitration agreements’ and in

‘domestic arbitration agreements’ if entered into during the arbitration proceedings.

Separation agreements in which a wife agrees not to apply for maintenance in return

for the husband’s payments are unenforceable. The court’s power to award maintenance

cannot be ousted (Hyman v Hyman (1929)) although wives can enforce the promised

payments if the agreement is in writing (Matrimonial Causes Act 1973 s 34). Contract

clauses which make claims more diffi cult to prove are controlled by the Unfair Contract

Terms Act 1977 (s 13(1)). Standard terms in consumer contracts which ‘hinder a consumer’s

right to take legal action’ are presumptively unfair and unenforceable under the

Unfair Terms in Consumer Contracts Regulations 1999 (Sch 2 para 1(q)).

W2.1.2.5 Contracts prejudicial to the state

A wide range of cases is included. Examples are:

• contracts to commit illegal acts in friendly foreign countries (eg to facilitate the

forceful overthrow of the government of a friendly country (De Wutz v Hendricks

(1824));

• trading with the enemy in wartime, thus aiding the enemy’s economy (Potts v Bell

(1800), now Trading with the Enemy Act 1939);

• contracts which corrupt public life (eg buying public offi ces or honours, Parkinson

v College of Ambulance Ltd (1925), now prohibited by the Honours (see Prevention

of Abuses) Act 1925)

• contracts whereby a public offi cial is paid a commission to use his position to procure

benefi ts for another (Montefi ore v Menday Motor Components Co (1918); Lemenda

Trading Co Ltd v African Middle East Petroleum Co Ltd (1988)) or to vote in a certain

way (Osborne v ASRS (1910)).

W2.1.2.6 Contracts which further sexually immoral purposes

Although it is sometimes said that contracts against good morals are void, traditionally

this means contracts perceived to promote extramarital sexual intercourse. In the past,

courts have refused to enforce:

• a promise to pay a woman to be a mistress (Franco v Bolton (1797));

• a promise to pay rent on premises known to accommodate the promisor’s mistress

(Upfi ll v Wright (1911)); and

• contracts between unmarried cohabiting couples.

The same results are unlikely to be reached today. Parliament and courts have conferred

some rights on unmarried cohabitees analogous to that of married couples, and judicial

attitude refl ects the growing incidence of extramarital relationships and changing

social mores.3 In Tinsley v Milligan (1994), illegality was not advanced on the basis that

the parties to the agreement were lesbian lovers. And, in Armhouse Lee Ltd v Chappell

(1996), the Court of Appeal denied that an agreement to advertise telephone sex lines

was unenforceable for immorality; indeed, the court criticised C’s ‘brazen cynicism’ in

attempting to avoid payment for A’s work which generated enormous profi ts for C by

pleading his own immorality.

However, agreements involving prostitution are likely to remain unenforceable (eg

rent for premises knowingly let for prostitution in Girardy v Richardson (1793) or hire

of an ornamental carriage knowingly let to further a prostitute’s trade in Pearce v Brooks

(1866)). Where a contract of employment requires an employee to procure prostitutes

for the employer’s customers, this would be unenforceable for illegality (Coral Leisure

Group Ltd v Barnett (1981)).

W2.1.2.7 Contracts prejudicial to family life

This covers two types of case. First, it invalidates contracts prejudicial to the institution

of marriage, for example:

• contracts not to marry (Lowe v Peers (1768)), or to pay a sum on marriage (Baker v

White (1690));

• paying someone to procure marriage (Hermann v Charlesworth (1905)), although

the need to condemn such contracts in modern times is questionable when dating

agencies are commonplace;

• separation agreements entered while spouses are living together, since they may

induce parties not to perform their matrimonial duties (Cartwright v Cartwright

(1863)), but such agreements are valid if made in anticipation of immediate

separation.

"No polluted hand shall touch the pure fountains of justice." 1

Section 23 of the Indian Contract Act, 1872 ("Act"), enumerates of three issues, i.e. consideration for the
agreement, the object the agreement and the agreement per se. Section 23 creates a limitation on the
freedom of a person in relation to entering into contracts and subjects the rights of such person to the
overriding considerations of public policy and the others enunciated under it.3 Section 23 also finds its
bearing in the other sections of the Act, namely section 264, 275, 286 and 307.

The word "object" used in section 23 connotes means "purpose" and does not purport a meaning in the
same sense as "consideration". For this reason, even though the consideration of a contract may be
lawful and real, that will not prevent the contract from being unlawful if the purpose (object) of the
contract is illegal. Section 23 restricts the courts, since the section is not guided by the motive, to the
object of the arrangement or transaction per se and not to the reasons which lead to the same.

1
'If the thing stipulated for is in itself contrary to law, the action by which the execution of the illegal act
is stipulated must be held as intrinsically null: pactis privatorum juri publico non derogatur. 8

In a recent assignment9, our firm advised the client not to include any such terms in the document to be
executed between the parties which would contravene any law in India. It was advised to the client that
the if the contract is to be enforced by a party to the same, any enforcement in India of such contract or
part thereof will not be possible in case the agreement or its object or the consideration involved
therein is in violation of a statute in India. Further, that despite the inclusion of disclosures, indemnity,
undertaking etc. in the contract and related transactional documents will not be of any advantage for
the purpose of any action in India, in case the contract or any part thereof is in violation of any
applicable statue, regulations, orders, bye-laws, guidelines etc. in India. In such case the contract will not
be valid for the purposes of any action in India in light of the above discussed provision(s) of the Act
since a party cannot consent to an agreement which is against the law. Moreover, the benefit of adding
the said disclaimer, indemnity and undertaking in the contract will safeguard the interests of the foreign
investee company (our client) only in the place whose law has been made applicable to the contract.
However, in case any Indian law is violated such disclaimer, indemnity and undertaking will not be a
ground for any defense, for any action in India, available to the party claiming a protection there under.

the above in perspective, it is pertinent to discuss the key elements of section 23 briefly; which are as
under.

Forbidden By Law

The word "forbidden by law" is not synonymous with the word 'void' and hence it is not necessary that
whatever is void is also "forbidden by law". 10 The above decision vas approved by the Supreme Court
in Gherulal Parakh v. Mahadeodas (AIR 1959 SC 781) and the court held that:

"The word 'immoral' is very comprehensive word. Ordinarily it takes in every aspect of personal conduct
deviating from the standard norms of life It may also be said that what is repugnant to good conscience
is immoral. Its varying content depends upon time, place and the stage of civilization of a particular
society. In short, no universal standard can be laid down and any law based on such fluid concept
defeats its own purpose. The provisions of Section 23 of the Contract Act indicate the legislative
intention to give it a restricted meaning. Its juxtaposition with an equally illusive concept, public policy,
indicates that it is used in a restricted sense; otherwise there would be overlapping of the two concepts.
In its wide sense what is immoral may be against public policy covers political, social and economic
ground of objection. Decided cases and authoritative text-books writers, therefore, confined it, with
every justification, only to sexual immorality. The other limitation imposed on the word by the statue,
namely, "courts consider immoral" brings out the idea that it is also a branch of the common law like the
doctrine of public policy, and, therefore, should be confined to the principles recognized and settled by
Courts. Precedents confine the said concept only to sexual immorality and no case has been brought to
our notice where it has been applied to any head other than sexual immorality. In the circumstances, we
cannot involve a new head so as to bring in wagers within its fold."

The word "law" in section 23(1) means judicial law, that is, the law enacted by government and it is not
permissible to a party to a contract to claim on the basis of a contract which is prohibited by a law. The
question, whether a particular transaction is forbidden by an Act or tends to defeat its provisions is
always one of construction of the Act, the rule for which is that it should be construed according to the
intention of the persons passing it and such intention should be gathered from what they have said in
the Act.

If Permitted It Would Defeat The Provisions Of Any Law

The words "if permitted, it would defeat the provisions of law" mentioned in section 23 ought to be
understood as referring to performance of an agreement which necessarily entails the transgression of
the provisions of any law. The general rule of law as followed by the courts is based on exception to the
maxim modus et conventio vincunt legem11. Meaning thereby, in case the express provision(s) of any
law is violated by a contract, the interests of the parties or of third parties, would be injuriously affected
by its fulfillment. The parties to a contract are permitted to regulate their rights and liabilities
themselves, and the court will only give effect to the intention of the parties as expressed in the contract
in accordance with the applicable laws of the land.

In short three principles arise from the section12 :

an agreement or contract is void, if its purpose is the commission of an illegal act;

an agreement or contract is void, if it is expressly or impliedly prohibited by any law;

an agreement or contract is void, if its performance is not possible without disobedience of any law.

As per section 23, the difference between agreements that are void and agreements those are illegal is
very thin or small. According to Anson13, "The law may either forbid an agreement to be made, or it
may merely say that if it is made, the courts will not enforce it. In the former case, it is illegal, in the
latter only void, but in as much as illegal contracts are also void, though void contracts are not
necessarily, the distinction is for most purposes not important and even judges seem to treat the two as
inter-changeable".

In Rajat Kumar Rath v. Government of India14 , the Orissa High Court has explained the distinction in the
following words:

"... A void contract is one which has no legal effect. An illegal contract through resembling the void
contract in that it also has no legal effect as between the immediate parties, has this further effect that
even transactions collateral to it became tainted with illegality and we, therefore, in certain
circumstances not enforceable. If an agreement is merely collateral to another or constitutes an aid
facilitating the carrying out of the object of the other agreement which though void is not prohibited by
law, it may be enforced as a collateral agreement. If on the other hand, it is part of a mechanism meant
to carry out the law actually prohibited cannot countenance a claim on the agreement, it being tainted
with the illegality of the object sought to be achieved which is hit by the law. Where a person entering
into an illegal contract promises expressly or by implication that the contract is blameless, such a
promise amounts to collateral agreement upon the other party if in fact innocent of turpitude may sue
for damages".

Fraudulent

'pari delicto est conditio defendentis' 15

The Hon'ble Supreme Court of India under plethora of judgments has observed / held that there are
several exceptions to the above rule. In this connection, the Hon'ble Supreme Court quoted with
approval the following observations of Anson: 16

"... there are exceptional cases in which a man will be relieved of the consequences of an illegal contract
into which he has entered, cases to which the maxim does not apply. They will fall into three classes: (a)
where the illegal propose has yet been substantially carried into effect before it is sought to recover
money paid or goods supplied or delivered in furtheranceof it; (b) where the plaintiff is not in pari
delicto with the defendant; (c) where the plaintiff does not have to rely on the illegality to make out his
claim".
Section 23 says that the consideration or object of the agreement is unlawful if it "is fraudulent".17 But
subject to such and similar exceptions, contracts which are not illegal and do not originate in fraud, must
in all respects be observed: pacta conventa quae neque contra leges neque dolo mall inita sunt
omnimodo observanda sunt (contracts which are not illegal, and do not originate in fraud, must in all
respects be observed).

Injury To Person Or Property Of Another

As per the provisions of section 23, an agreement which involves causing injury to a person or property
of third party is void and cannot be enforced by court and therefore, no claim is sustainable for the
breach of such an unlawful agreement.

Opposed To Public Policy

It is trite law that one who knowingly enters into a contract with improper object cannot enforce his
rights in relation to such contract. Notably, the Act does not anywhere define the expressions "public
policy" or "opposed to public policy" or "contrary to public policy". However, one may note that the
term "public policy" could plainly mean issues concerning the public or public benefit and the interest of
public at large. 'Public Policy' is ".... a vague unsatisfactory term calculated to lead to uncertainty and
error when applied to the decision of legal rights; it is capable of being understood in different senses; it
may and does in ordinary sense means political expediency or that which is best for common good of
the community; and in that sense there may be every variety of opinion; according to education, habits,
talents and dispositions of each person who is to decide whether an act is against public policy or not..."
According to Lord Atkin18,

"... the doctrine does not extend only to harmful effects, it has to be applied to harmful tendencies. Here
the ground is less safe and treacherous".

The above principle has been followed by the Hon'ble Supreme Court of India in Gherulal Parekh v.
Mahadevdas Maiya19, wherein Hon'ble Justice Subba Rao, referring the observation of Lord Atkin
observed: "... Public policy or the policy of the law is an illustrative concept. It has been described as an
'untrustworthy guide', 'variable quality', 'unruly horse', etc.; the primary duty of a court of law is to
enforce a promise which the parties have made and to uphold the sanctity of contract which forms the
basis of society but in certain cases, the court may relieve them of their duty of a rule founded on what
is called the public policy. For want of better words. Lord Atkin describes that something done contrary
to public policy is a harmful thing; but the doctrine is extended not only to harmful cases; but also to
harmful tendencies.... it is governed by precedents. The principles have crystalised under different
heads.... though the heads are not closed and though the oretically, it may be permissible to evolve a
new head under exceptional circumstances of thechanging world, it is advisable in interest of stability of
society not to make attempt to discover new heads in these days". In Kedar Nath Motani v. Prahlad
Rai20 , the Hon'ble Court held that "the correct view in law .... is that what one has to see is whether the
illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying
upon the illegal transaction into which he had entered. If the illegality be trivial or venial..... and the
plaintiff is not required to rest his case upon that illegality, then public policy demands that defendant
should not be allowed to take advantage of the position. A strict view, of course, must be taken of the
plaintiff's conduct, and should not be allowed to circumvent the illegality by restoring to some
subterfuge or by misstating the facts. If, however, the matter is clear and the illegality is not required to
be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose
was achieved, then, unless it be of such a gross nature as to outrage the conscience of the court, the
plea of the defendant should not prevail."

The Hon'ble Supreme Court of India has dealt with certain cases under section 23 holding that some
actions of entering into contract are void. In the matter titled "ONGC Ltd. v. Saw Pipes Ltd."21 while
interpreting the meaning of 'public policy' in this case, the Hon'ble Court observed that it has been
repeatedly stated by various authorities that the expression 'public policy' does not admit of precise
definition and may vary from generation to generation and from time to time. Hence, the concept
'public policy' is considered to be vague, susceptible to narrow or wider meaning depending upon the
context in which it is used. Therefore, it was held that the term 'public policy' ought to be given a wider
meaning. The Hon'ble Court placing reliance on "Central Inland Water Transport Corporation Limited
and Anr. v. Brojo Nath Ganguly and Anr." [(1986) IILLJ 171 SC] held that what is good for the public or in
public interest or what would be harmful or injurious to the public good or interest varies from time to
time. However, an award, which is on the face of it, patently in violation of statutory provisions cannot
be said to be in public interest. Such an award is likely to adversely affect the administration of justice.
Hence, the award should be set aside if it is contrary to (i) fundamental policy of Indian Law; (ii) the
interest of India; (iii) justice or morality; (iv) in addition, if it is patently illegal. The illegality must go to
the root of the matter and if the illegality is of a trivial nature, it cannot be held that the award is against
the public policy. An award can also be set aside if it is so unfair and unreasonable that it shocks the
conscience of the court.

Conclusion

On the basis of above discussed, it can be easily understood that the ambit and scope of section 23 is
vast and therefore the applicability of its provisions is subject to meticulous scrutiny by the court of the
consideration and object of an agreement and the agreement itself. Therefore, in order to bring a case
within the purview of section 23, it is necessary to show that the object of the agreement or
consideration of the agreement or the agreement itself is unlawful.
Footnotes

1. Per Wilmot, C.J., in Collins v. Blantern, (1867) 1 Smith LC 369

2. Section 23 of the Indian Contract Act, 1872 - What considerations and objects are lawful and what not
The consideration or object of an agreement is lawful, unless- It is forbidden by law; or is of such a
nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or
implies injury to the person or property of another; or the Court regards it as immoral, or opposed to
public policy. In each of these cases, the consideration or object of an agreement said to be unlawful.
Every agreement of which the object or consideration is unlawful is void.

3. In Re: K.L. Gauba (23.04.1954 - BOMHC) [AIR 1954 Bom 478]. Para 11 : "...The freedom of the citizen,
as indeed the freedom of the lawyer, to enter into a contract is always subject to the overriding
considerations of public policy as enunciated in S. 23 of the Indian Contract Act. That freedom is also
subject to the other considerations set out in S. 23."

4. Agreement in restraint of marriage void

5. Agreement in restraint of trade void

6. Agreements in restraint of legal proceedings void

7. Agreements by way of wager void

8. Arg., 4 Cl. & F. 241; Broom's Legal Maxims, p. 541

9. Review of a Private Placement Memorandum to be issued by a US company to selected investors in

India.
10. Mahadeodas and Ors. vs. Gherulal Parakh and Ors. (AIR 1958 Cal 703)

11. the form of agreement and the, convention of the parties overrule the law

12. Neminath v. Jamboorao, AIR 1966 Mys 154: (1965) 1 Mys LJ 442

13. Principles of the English Law of Contract, 22nd edn.

14. AIR 2000 Ori 32, 34-35

15. both parties are equally at fault

16. Principles of the English Law of Contract, 22nd Edition, p. 343.

17. Relevant Illustrations to Section 23: (e) 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. (g) A, being agent for a landed proprietor, agrees for money, without the knowledge of his
principal, to obtain for 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.

18. Fender v. St. John Milday, 1983 AC 1 (HC)

19. AIR 1959 SC 781

20. AIR 1960 SC 213

21. 2003 (2) RAJ 1 (SC)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice
should be sought about your specific circumstances.

Books referred

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York, 2010.
2) Cheshire, Fifoot & Furmston Law of Contract I6”l Ed. 2012.0xford University Press, Inc.
NewYork, 2007. Markanda P.C. Building and Engineering Contracts Law and Practice,
3“ ed. 2010.
3) Pollock & Mulla Indian Contract & Specific ReliefAct 14‘11 Ed. 2016. Butterworth
India, 14th Floor, Vijaya Building, Barakhamba Road, Connaught Place, New Delhi.
4) Singh Avtar Law of Contract and Specific Relief 10th Ed. 2008, BBC Publishing (P)
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