95d41unlawful object and consideration

7/30/2019 95d41Unlawful Object and Consideration

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Unlawful Object and

Consideration

Amit Mishra

LecturerAmity Law School


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Unlawful Object and Consideration

It is an essential element of a valid contractthat 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.


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Sec 23 -when object or consideration

may be unlawful

1. If it is forbidden by law.

2. If it is of such a nature that, if permitted, itwould defeat the provisions of any law.

3. If it is fraudulent.

4. If it involves or implies injury to the personor property of another.

5. If the court regards it as immoral.6. If the court regards it as opposed to public

policy.


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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.


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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.


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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.


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4. Injurious to Person or Property

Injury means wrong, harm or damage.

Person means ones body.

Property includes both movable andimmovable property.

Example: A promised to give Rs. 10 lakhs to B

if he hurts grievously to C.


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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 lendercould not recover the money.


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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 mischievoustendency 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.


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There are some agreements which have beenheld to be opposed to public policy and areunlawful and therefore are void.

i) Trading with enemyii) 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


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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.


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ii) Trafficking in public offices and

titles

Agreements for the sale or transfer of public offices and titlesor for the procurement of a public recognition like BharatRatna, Padma Vibhushan or Param Veer Chakra for monetaryconsideration are unlawful, being opposed to public policy.

If such agreements are enforced, it would lead to inefficiencyand 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 BharatRatna award and for the same, Ratan Tata promised to pay Sonia Rs.50 Crore.


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iii) Marriage Brokerage Contracts

An agreement to procure the marriage of aperson in consideration of a sum of money iscalled 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.


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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.


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Thanks!

95d41unlawful object and consideration

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