Legality of Consideration and

Object
Introduction
If an agreement is to be enforced in a
court of law, both consideration and
object must be lawful.
Either consideration or object unlawful=
void contract
Circumstances where
agreement unlawful
 If it is
 Forbidden by any law
 Defeat provisions of any law
 Fraudulent
 Causes injury either to person or ppty
of another
 Immoral or opposed to public policy
 Forbidden by law
 Agreement void
 Law prohibits an act for various
reasons.
 Some acts are punishable under Indian
Penal Code or some under special
legislation
 Eg:- smuggling COFEPOSA
Defeating the provisions of
any law
 Where enforcement of agreement is of
the nature that it would defeat the
provisions of any statutory law in force,
the agreement is void.
 That laws may be Companies Act,
Partnership Act, Consumer Protection
Act, Pollution Control, Banking
Regulation Act etc.
 Fraudulent acts
 Object fraudulent or purpose of
agreement has the effect to promote
fraud- agreement void.
 What are fraudulent acts?
 Injury to the person or ppty
 Agreement void
 Injury
 Criminal or wrongful harm
Immoral agreements and agreements
opposed to public policy
 Contrary to good morals are illegal and void
 Agreements injurious to public
 Against public welfare
 Public policy is a rule of law which lays down that
no person shall do anything which is not for the
good of the society
 Eg:- agreement with alien enemy at the time of
war- public policy
 Sale of public office
 Marriage brokerage agreements
1. A is an employee of B & Co. After
leaving the service, he agrees with B&
Co. that he will not employ himself in
any similar concern within a distance of
1,000 kilometers of the town. Is this
restraint valid?
2. A borrows Rs. 500/- from B to purchase
certain smuggled goods from C. Can B
recover the amount from A if he (a) knows of
A’s purpose for which he borrows the money,
(b) does not know of A’s purpose.
( A gambling house)
3. A advances Rs.2000/- to B, a married woman
to to enable her to obtain a divorce from her
husband. B agrees to marry A as soon as she
obtained a divorce. B obtains the divorce but
refuses to marry A. Can A recover the
amount?
4. A a Mumbai doctor, employed another doctor,
B as an assistant for a period of 3 years on a
salary of Rs. 5000/- per mensem. The
agreement b/w A & B provided that after the
termination of his employment B should not
practice as a doctor in Mumbai within a
radius of 1 kilometer of A’s dispensary for a
period of one year and if B did so, he should
pay Rs. 20,000/- to A as liquidated damages.
Immediately after the termination of his
employment B began to practice as a doctor
next door to A’s dispensary. A thereupon sued
B for the recovery of Rs.20,000. How would
you decide?
5. X a physician practicing in Delhi, took Y
as his assistant for three years during
which Y agreed not to practice of his
own in Delhi. At the end of a year from
the date of agreement with X, Y began
his own independent practice while still
in service. Has X any legal remedy
against Y?
6. A and B agree that A shall sell his house to B
for a sum of Rs.1 lakh provided he used it for
residential purposes and would charge Rs.2
lakhs if he were to use the house for
gambling. It is further agreed b/w them that
the consideration shall be paid after a year of
registration of the house in the name of B. A
executes a transfer in favour of B. After six
months, B uses the house for gambling
purposes. Discuss the rights of A?