LEGALITY OF OBJECT

AND
CONSIDERATION
 Introduction
 If an agreement is to be enforced in a
court of law, both consideration and
object of the agreement must be
lawful.

 When one of consideration or object

is unlawful, the contract is void.
 In order to constitute a valid contract, both
consideration as well as object must be lawful;
otherwise would be void.

 According to section 23 “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 is
unlawful is void”.
CONSIDERATION
 Section 2(d) of the Indian Contract Act
defines consideration as when at the desire
of the promisor, the promise or any other
person has done or abstained from doing, or
does or abstains from doing, or promises to
do or to abstain from doing something, such
act or abstinence or promise is described a
consideration for the promise.
 Example: A agrees to sell his home to B for
Rs. 10, 00,000. Here B's promise to pay Rs.
10, 00,000 is the consideration for A's
promise to sell the home and A's to sell the
home is the consideration for B’s promise to
pay Rs. 10, 00,000.
When Consideration or Object
is Unlawful
If it is forbidden by law:
Law forbids an act for various reasons.
If the consideration or the object of an
agreement
is doing of such an act which is forbidden by
law,
the agreement is void.

Example: A promises B to drop a

prosecution which he has instituted against
B for robbery, & B promise to restore the
value of the things taken. The agreement is
void, as its object is unlawful.
If it is of such a nature that, if
permitted,
it would defeat the provisions of law:
It refers to cases where, there being no
express
statutory prohibition against a particular type of
contract, the nature of the contract is such that
it
would be against the spirit of a particular law,
whether enacted or otherwise.

Examples: (a) An agreement between

husband and wife to live separately is invalid
as being opposed to Hindu Law.

(b) An agreement by the debtor not to raise

If it is fraudulent:
It refers to contract which are entered into
between parties with an object which is fraudulent
or with a purpose which will in effect promote
fraud.
Examples: (a) A, promises to pay Rs 200 to B, if B
would commit fraud on C. B agrees. B’s agreeing
to defraud is unlawful consideration for A’s
promise to pay. Hence the agreement is illegal
and void.
(b) 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.
If it involves or implies injury to the
person or property of another:
If the object of an agreement is to cause injury to
the persons or property of another, it is unlawful.
Injury means criminal or wrongful harm. An
agreement to commit an assault is void.

Examples: (a) An agreement by which a debtor,

who borrowed Rs 100, promised to do manual
labour without pay for the creditor, so long as the
debt was not repaid in full has been held to be
void, as it involved injury to the person of the
debtor.

(b) An agreement between some persons to

purchase shares in a company, and thus by fraud
& deceit to induce other persons to believe that
there is a bonafide market for the shares, is void.
If the court regards it as immoral:
Agreement which are contrary to good morals
are
illegal and void. If the consideration for the
agreement is an act of sexual immorality the
agreement is illegal.

Examples: (a) A agrees to let her daughter to

B for
concubinage(state of living together as man &
wife
without being married). This agreement is
unlawful
and immoral.

(b) An agreement for future marriage, after

 Unlawful & Illegal Agreements
 "Unlawful" and "illegal" mean pretty much
the same thing.
 An unlawful agreement is one which, like a
void agreement, is not enforceable by law.
It is void and is destitute of legal effects
altogether. It affects only the immediate
parties & has no further consequences.
 An illegal agreement , is not only void as
between immediate parties but has this
further effect that collateral transactions to it
also become tainted with illegality.
Examples: (a) L lends Rs. 5,000 to B help him
to
purchase some prohibited goods from T, an
alien
enemy. If B enters into an agreement with T,
the
agreement will be illegal and the agreement
between B and L shall also become illegal,
being
collateral to the main transaction which is
illegal, L
cannot, therefore, recover the amount. He can
recover the amount if he did not know the
purpose of the loan.
 EFFECTS of ILLEGALITY
 Whether illegality is severable.
 Reciprocal promises.
 Alternative promise, one branch being
illegal.
 Agreements void, if consideration and
objects unlawful in part.
Thank You