LEGALITY OF OBJECT

LEGALITY OF OBJECT
According to Sec. 23 of the Indian Contract Act, the objects
and the consideration of an agreement shall be unlawful in
the following cases
• Where it is forbidden by law
• Where it defeats the provision of any law
• Where it is fraudulent
• Where it is injurious either to the person or his
property
• Where it is regarded as immoral
• Where it is opposed to public policy
 AGREEMENTS OPPOSED TO PUBLIC POLICY

1. Trading with an alien enemy

2. Agreement for stifling prosecution
3. Maintenance and Champerty
4. Agreement for sale of public offices and titles
5. Marriage brokerage agreements
6. Agreement in restraint of personal liberty
7. Agreement in restraint of parental rights
8. Agreements tending to create interest opposed to duty
9. Agreements interfering with marital duties
10. Agreements to vary the period of limitation
11. Agreements to defraud creditors or revenue authorities
12. Agreement tending to create monopoly
13. Agreement to commit a crime
AGREEMENTS IN RESTRAINT OF MARRIAGE
[SECTION 26]
• Example: A promised to marry B only and
none else, and to pay Rs. 2000 in default. A
married C and B sued A for recovery of Rs.
2000. It was held that B could not recover
anything because the agreement was in
restraint of marriage. [Lowe vs. Peers]
 AGREEMENTS IN RESTRAINT OF TRADE
[SECTION 27]
Every agreement by which anyone is restrained from
exercising a lawful profession, trade or business of
any kind is void.

Example: In the case, Madhub Chander vs Raj

Coomar, A and B were rival shopkeepers in a locality
of Calcutta. A agreed to pay a sum of money to B if he
would close his business in that locality. B closes his
shop. On A’s refusal to pay the amount, the court held
that the agreement was void under Sec. 27 of the Act.
EXCEPTIONS
a) Sale of Goodwill
b) Restrictions under Partnership Act
c) Trade Combinations
d) Service Agreements
 VOID AGREEMENTS
The agreements which the courts of law will not enforce are Void
agreements.

1. Agreements by incompetent persons [Section 11].

2. Agreements made under a mutual mistake [Section 20].
3. Agreements, the object or consideration of which is unlawful [Section 23].
4. Agreements, the object or consideration is partly unlawful [Section 24].
5. Agreements made without consideration [Section 25].
6. Agreements in restraint of marriage [Section 26].
7. Agreements in restraint of trade [Section 27].
8. Agreements in restraint of legal proceedings [Section 28].
9. Agreements the meaning of which is uncertain [Section 29].
10. Agreements by way of wager [Section 30].
11. Agreements to do impossible acts [Section 56].
AGREEMENTS THE MEANING OF WHICH IS
UNCERTAIN [SECTION 29]
• Example: A agreed to sell to B, 100 tons of oil.
There is nothing whatever to show what kind
of oil was intended. Therefore, the agreement
is void for uncertainty.
AGREEMENTS BY WAY OF WAGER [SECTION 30]
• Sir William Anson defines a wager as “a promise
to give money or money’s worth upon the
determination or ascertainment of an uncertain
event”
Examples:
X agrees with Y that if there is rain on a certain day
X will pay Y Rs. 1000. If there is no rain Y will pay X
Rs. 1000. The agreement is of a wagering nature.
Essential Features of a Wager Agreement
1. Promise to pay money or money's worth
2. Event
3. Uncertainty of the event
4. Mutual chances of gain or loss
5. No control over the event
6. Stake as the only interest
Exceptions to Wager
1.Horse race
2.Crossword competitions
3. Games of skill
4.Share market transactions
5.Contracts of insurance