Legality of Object

Definition of Consideration, When Consideration or object is unlawful, effects of illegality, Unlawful & illegal agreements.....
It's useful for law students.

1. LEGALITY OF OBJECT AND CONSIDERATION

2. 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.

3. 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”.

4. 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.

5. 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, t he 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.

6. 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 the plea of limitation is void.

7. 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 .

8. 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.

9. 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 death of first wife is against good morals and hence it is void.

10. 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.

11. 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 . (b) An agreement to commit a crime or tort, an agreement to assault A, is illegal.

12. EFFECTS of ILLEGALITY Whether illegality is severable. Reciprocal promises. Alternative promise, one branch being illegal. Agreements void, if consideration and objects unlawful in part.

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