JMM KLELC 1 Legality of Consideration and Object S. 23
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Legality ofConsideration and Object
S. 23
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S. 23 What considerations and objects are lawful, and what not
The consideration or object of an agreement is lawful, unless-
1. It is forbidden by law; or2. is of such a nature that ,if permitted, it would defeat the
provisions of any law; or3. is fraudulent; or4. Involves and implies injury to the person or property of
another; or5. The court regards it as immoral, or opposed to public
policy.In each of these cases, the consideration or object of
an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful, is void.
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IllustrationsA agrees to sell his house to B for Rs. 10,000.
Here B's promise to pay the sum of Rs. 10,000 is the consideration for A's promise to sell the house, and A's promise to sell the house is the consideration for B's promise to pay Rs. 10,000.
These are lawful considerations.
A promises to pay B 1,000 rupees at the end of six months, if C, who owes that sum to B, fails to pay it. B promises to grant time to C accordingly. Here the promise-of each party is the consideration for the promise of the other party.
They are lawful considerations.
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A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here A's promise is the consideration for B's payment and B's payment is the consideration for A's promise
These are lawful considerations.
A promises to maintain B's child and B promises to pay A 1,000 rupees yearly for the purpose. Here the promise of each party is the consideration for the promise of the 'other party.
They are lawful considerations.
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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.
A promises to obtain for B an employment in the public service, and B promises to pay 1,000 rupees to A.
The agreement is void, as the consideration for it is unlawful.
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A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for B a lease of land belonging to his principal.
The agreement between A and B is void. as it implies a fraud by concealment, by A, on his principal.
A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken.
The agreement is void, as its object is unlawful.
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A's estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing, the estate. B, upon an understanding with A, becomes the purchaser, and agrees to convey the estate to A upon receiving from him the price which B has paid. The agreement is void, as it renders the transaction, in effect a purchase by the defaulter, and would so defeat the object of the law.
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A, who is B's mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A. The agreement is void, because it is immoral
A agrees to let her daughter to hire to B for concubinage.
The agreement is void, because it is immoral, though the letting may not be punishable under the Indian Penal Code. (45 of 1860.)
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Con
side
ratio
n or
obj
ect Forbidden by law
Defeat the provision of any law
Fraudulent
Injury to person or property
Immoral/opposed public policy
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Analysis of S. 23►Object or Consideration►The section covers legality of consideration
and object as well.►Object and consideration sometimes may be
different – both shall be lawful►Eg. loan for child marriage – consideration
lawful but object unlawful -defeats the purpose of CMRA
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Forbidden by Law► Object of an agreement forbidden by law is void ► ‘Law’ – law in force in India, personal laws
unwritten principles of law► Eg. Sale of liquor without license
§ void & price irrecoverable ► Eg. License to run liquor shop – sale, transfer, sub-
lease of license or creation of partnership to run liquor shop – agreement of partnership§ void
► Eg. An agreement to buy goods (jaggery powder) above control price
► void
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Defeat the provision of any law► Object or consideration of an agreement is such that
though it is not directly prohibited, if permitted, would defeat the provision of any law, such agreement is also void.
► Sundersingh v. krishnasinghagreement by the accused with surety for providing security under Cr. P.C.– void
► Agreement to defeat the law of a friendly country is also void
► Foster v. Driscoll – Agreement to buy whisky in Great Britain & to smuggle it in to US § led to commission of offence in a foreign & friendly
country – breach of international comity – hence void.
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► But innocent violation of municipal or foreign law which may not offend public conscience, may not make the agreement voidHoward v. Shirlaster Container Transport Ltd
Owner of an aircraft agreed with the pt for successfully removing his aircraft from Nigerian territorial airspace. Pt did so without permission of the Nigerian authorities and landed it in Ivory coast. The pt did so under the belief that there was imminent danger to lives in Nigeria. Pt sued for fees –
Held: allowed to recover. Although court would not normally enforce a contract to enable a pt to benefit from his criminal conduct, because to do so, would offend public conscience. There are circumstances, it would be wrong to disqualify a person from recovering, even though his conduct constituted statutory offence.
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Fraudulent► An agreement made for a fraudulent purpose to
deceive third parties is void ► Eg. Agreement with debtor and creditor that the
creditor would get separate commission for inducing other creditors to enter into composition of their debts.
► Eg. Two decree holders - Pt, decree holder with property attachment brought it to sale – agreed with the dt to buy for lesser price and then pay him a sum – property was knocked down to dt for a small price.
Held, agreement void, it deprived the other decree holder of what he would have got if the sale had been competitive.
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Injury to person or property►An agreement to injure the person or property
of another is unlawful and void ►Eg. A person barrowed a sum of Rs. 100 and
agreed to serve pt for 2 yrs without pay and in case of default to pay the exorbitant interest and principal at once.
Held, it involved slavery and unlawful and void► agreement to commit assault, hurt,
defamation, etc►Eg. Agreement of insurance – insured
committing suicide to help dependents§ void.
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Immoral► Agreement tainted immorality is not enforced► “Immorality” depends on standards of morality
prevailing in a society at a given time and as approved by courts.
► Instances of immorality-1. Interference with marital relations
► Eg. Money lent to a married woman to enable her to get divorce from her husband and promise to marry the lender§ void
► Promise to marry a woman after her husband’s death§ void
Immoral ► Fender v. St. John – dt a married man told a
nurse that he was unhappy with his wife and enquired whether she would marry him if his wife divorces him – she consented, sexual relations took place – dt’s wife secured decree of divorce on the ground of adultery – dtcommitted breach and married another
► HELD: pt was allowed to claim compensation – circumstances leading to mischief were absent hence not immoral.
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2. Dealings with Prostitutes► Always considered immoral ► Eg. sale/hiring of goods to a prostitute for
enabling her to carry on her business§ void
► Landlord knowingly letting his house for carrying on the business of prostitution
§ void
3. Illegal cohabitation► England – past consideration not valid –
if promised in writing to pay for illegal cohabitation
► India – promise to pay for-i. Adulterous cohabitation, past/ present/future
– voidii. Future cohabitation – voidiii. Past cohabitation to secure it in future – voidiv. Past cohabitation only – valid
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Opposed to public policy► An agreement is unlawful if the court regards its
object or consideration as opposed to ‘public policy’► ‘public policy’ – vague & unsatisfactory term. ► TEST: “the twin touchstones of public policy are,
§ advancement of public good and § prevention of public mischief.
These questions have to be decided by judges not as men of legal learning but as experienced and enlightened members of the community representing the highest common factor of public sentiment and intelligence”
► Eg. Surrender of rights, sale of seats in public offices, etc.
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Heads ofPublic Policy
Trading with
Enemy
Trafficking in
Public Office
Interferencewith
Administration of
justice
Interferencewith
Course of justice
ShiftingProsecution
Maintenanceand
Champerty
MarriageBrokerage contracts
Unfair orUnreaso-
nabledealings
1. Trading with an enemy ►Object of war is to cripple the commerce of
enemy country
►A declaration of war imports prohibition of commercial intercourse and correspondence with the inhabitants of enemy country.
►Illegal except with the permission of the Crown.
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2. Trafficking in Public offices►An agreement with a public
officer to act corruptly is contrary to public policy.
►Agreement to provide money to a parliamentarian to influence his judgment
► sale of public offices in consideration of money .
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3. Interference with Administration
of Justice
Interference with course of
justice Shifting
prosecutionMaintenance & Champerty
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4. Marriage brokerage contracts ►An agreement to procure marriage of a
person in consideration of money – void
►Agreement for the sale of girl – void
►Attempt to make any material gain out of marriage is equally opposed public policy and void
►Gifts promised at the time of marriage – void
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5. Unfair and unreasonable dealings Where-►Parties economically are not on same
footing ►Unequal bargaining power ►One in a position to exploit and the other is
vulnerable ►Bargain is apparently unfair
►Opposed to public policy►Eg. Service contracts.
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