Unlawful Object and Consideration

Amit Mishra Lecturer Amity Law School

Unlawful Object and Consideration

It is an essential element of a valid contract that parties must contract for a lawful object. If the object is unlawful then the contract is void. Examples: Giving

or taking bribe, Match fixing, planning for robbery in bank, sale of liquor without licence.

Sec 23 -when object or consideration may be unlawful

1.

2.
3. 4. 5. 6.

If it is forbidden by law. If it is of such a nature that, if permitted, it would defeat the provisions of any law. If it is fraudulent. If it involves or implies injury to the person or property of another. If the court regards it as immoral. If the court regards it as opposed to public policy.

1. Forbidden by Law

If the object or the consideration of an agreement is the doing of an act forbidden by law, the agreement is void. Example: sale of liquor without licence. Therefore, sale is void and the price irrevocable.

2. Defeat the Provisions of any Law

If the object or the consideration of an agreement is such that, though not directly forbidden by law, it would defeat the provisions of any law, the agreement is void. Example: A was licensed under an Excise Act to run a liquor shop. The Act forbade the sale, transfer or sub-lease of the licence or the creation of a partnership to run the shop. A took B into partnership. Held, the agreement was void.

3. If it is Fraudulent

An agreement which is made for a fraudulent purpose is void. Example: A, B and C enter into an agreement for the division of equal shares after making forged documents and stamps to get a loan of Rs. 60 Lakhs from the bank. The agreement is void as its object is unlawful.

4. Injurious to Person or Property

Injury means wrong, harm or damage. Person means ones body. Property includes both movable and immovable property. Example: A promised to give Rs. 10 lakhs to B if he hurts grievously to C.

5. Immoral

When the object or consideration in an agreement is immoral then that agreement is called unlawful and thus it is void. Example: a married woman was given money to enable her to obtain divorce from her husband and then to marry the lender. Held, the agreement was immoral and the lender could not recover the money.

6. Opposed to Public Policy

An agreement is opposed to public policy when it is harmful to the public welfare. The Principle of Public Policy holds that- no subject can lawfully do that which has a mischievous tendency to be injurious to the interests of the public. Examples:

Sale of minor girls for money, Sale of seats in a public institution like medical college or UPSC.

There are some agreements which have been held to be opposed to public policy and are unlawful and therefore are void.
i) Trading with enemy ii) Trafficking in public offices and titles iii) Marriage brokerage contracts iv) Interference with administration of justice. a) Interference with the court of justice b) Stifling prosection c) Maintenance and Champerty

i) Agreements of trading with enemy

An agreement made with an alien enemy in time of war is illegal on the ground of public policy. Contracts which are entered into before the outbreak of war are either suspended or dissolved.

ii) Trafficking in public offices and titles

Agreements for the sale or transfer of public offices and titles or for the procurement of a public recognition like Bharat Ratna, Padma Vibhushan or Param Veer Chakra for monetary consideration are unlawful, being opposed to public policy. If such agreements are enforced, it would lead to inefficiency and corruption in public life. Examples:

A promised to obtain an IAS post for B in UPSC Interview and B promised to pay A Rs. 1 crore. Sonia Gandhi promised to Ratan Tata to nominate him for Bharat Ratna award and for the same, Ratan Tata promised to pay Sonia Rs. 50 Crore.

iii) Marriage Brokerage Contracts

An agreement to procure the marriage of a person in consideration of a sum of money is called MBC. Such agreements are void. Marriage of minor girls for money is very common in India especially in Hyderabad. Example:
marriage

of a minor girl in consideration of

money.

iv) Interference with Administration of Justice

It may take any of the following forms:a) Interference with the court of Justice. b) Stifling Prosecution. c) Maintenance and Champerty Agreements.

Thanks!