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8. Legality of Object

Jun 02, 2018

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    JMM KLELC 1

    Indian Contract Act,1872

    Legality ofConsideration and

    Object

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    JMM KLELC 2

    S. 23 What considerations and objects arelawful, and what not

    The consideration or object of an agreement is lawful,

    unless-1. It is forbidden by law; or

    2. Is of such a nature that ,if permitted, it would defeat theprovisions of any law; or

    3. Is fraudulent; or

    4. Involves and implies injury to the person or property ofanother; or

    5. The court regards it as immoral, or opposed to publicpolicy.

    In each of these cases, the consideration or object ofan agreement is said to be unlawful. Every agreement of

    which the object or consideration is unlawful, is void.

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    JMM KLELC 3

    Illustrations

    A 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, andA's promise to sell the house is the consideration forB's promise to pay Rs. 10,000.

    These are lawful considerations.

    A promises to pay B 1,000 rupees at the end ofsix months, if C, who owes that sum to B, fails to pay

    it. B promises to grant time to C accordingly. Herethe promise-of each party is the consideration for thepromise of the other party.

    They are lawful considerations.

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    JMM KLELC 4

    A promises, for a certain sum paid to himby B, to make good to B the value of his ship if it

    is wrecked on a certain voyage. Here A's promiseis the consideration for B's payment and B'spayment 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 thepurpose. Here the promise of each party is theconsideration for the

    promise of the 'other party.

    They are lawful considerations.

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    JMM KLELC 5

    A, B and C enter into an agreement forthe 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 anemployment in the public service, and Bpromises to pay 1,000 rupees to A.

    The agreement is void, as the

    consideration for it is unlawful.

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    JMM KLELC 6

    A, being agent for a landed proprietor, agreesfor money, without the knowledge of his principal,

    to obtain for B a lease of land belonging to hisprincipal.

    The agreement between A and B is void. as itimplies 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 promisesto restore the value of the th

    ings taken.

    The agreement is void, as its object is

    unlawful.

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    JMM KLELC 7

    A's estate is sold for arrears of revenueunder the provisions of an Act of the

    Legislature, by which the defaulter isprohibited from purchasing, the estate. B,upon an understanding with A, becomes

    the purchaser, and agrees to convey theestate to A upon receiving from him theprice which B has paid.

    The agreement is void, as it renders thetransaction, in effect a purchase by thedefaulter, and would so defeat the object

    of the law.

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    JMM KLELC 8

    A, who is B's mukhtar, promises to exercise

    his influence, as such, with B in favour of C, andC 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 forconcubinage.

    The agreement is void, because it isimmoral, though the letting may not bepunishable under the Indian Penal Code. (45 of1860.)

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    JMM KLELC 9

    Analysis of S. 23

    Object or ConsiderationThe section covers legality of consideration

    and object as well.

    Object and consideration sometimes may bedifferent both shall be lawful

    Eg. loan for child marriage considerationlawful but object unlawful -defeats thepurpose of CMRA

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    JMM KLELC 10

    Considerationor object

    Forbidden by law

    Defeat the provision of any law

    Fraudulent

    Injury to person or property

    Immoral/opposed public policy

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    JMM KLELC 11

    Forbidden by LawObject of an agreement forbidden by law is void

    Law law in force in India, personal lawsunwritten principles of law

    Eg. Sale of liquor without license is void & price

    irrecoverableEg. License to run liquor shop sale, transfer, sub-

    lease of license or creation of partnership to runliquor shop agreement of partnership void

    Eg. An agreement to by goods (jaggerypowder)above control price is void

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    JMM KLELC 12

    Defeat the provision of any lawObject or consideration of an agreement is such that

    though it is not directly prohibited, if permitted,would defeat the provision of any law, suchagreement is also void.

    Sundersingh v. krishnasingh

    agreement by the accused with surety for providingsecurity under Cr. P.C.void

    Agreement to defeat the law of a friendly country isalso void

    Foster v. DriscollAgreement to buy whisky inGreat 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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    JMM KLELC 13

    But innocent violation of municipal or foreign law whichmay not offend public conscience, may not make theagreement void

    Howard v. Shirlaster Container Transport LtdOwner of an aircraft agreed with the pt for successfully

    removing his aircraft from Nigerian territorialairspace. Pt did so without permission of the Nigerianauthorities and landed it in Ivory coast. The pt did sounder the belief that there was imminent danger tolives in Nigeria. Pt sued for fees

    Held: allowed to recover. Although court would notnormally enforce a contract to enable a pt to benefit

    from his criminal conduct, because to do so, wouldoffend public conscience. There are circumstances, itwould be wrong to disqualify a person fromrecovering, even though his conduct constitutedstatutory offence.

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    JMM KLELC 14

    FraudulentAn agreement made for a fraudulent purpose to

    deceive third parties is void

    Eg. Agreement with debtor and creditor that thecreditor would get separate commission for inducingother creditors to enter into composition of their

    debts.Eg. Two decree holders - Pt, decree holder with

    property attachment brought it to sale agreed withthe 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 decreeholder of what he would have got if the sale had beencompetitive.

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    JMM KLELC 15

    Injury to person or propertyAn agreement to injure the person or property

    of another is unlawful and voidEg. A person barrowed a sum of Rs. 100 and

    agreed to serve pt for 2 yrs without pay and incase of default to pay the exorbitant interestand principal at once.

    Held, it involved slavery and unlawful and void

    agreement to commit assault, hurt,

    defamation, etcEg. Agreement of insurance insured

    committing suicide to help dependents

    void.

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    JMM KLELC 16

    Immoral Agreement tainted immorality is not enforced

    Immorality depends on standards of moralityprevailing in a society at a given time and asapproved 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 marrythe lender

    void Promise to marry a woman after her husbands death

    void

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    Immoral

    Fender v. St. Johndt a married man told anurse that he was unhappy with his wife andenquired whether she would marry him if hiswife divorces him she consented, sexual

    relations took place dtswife secured decreeof divorce on the ground of adultery dtcommitted breach and married another

    HELD: pt was allowed to claimcompensation circumstances leading tomischief were absent hence not immoral.

    JMM KLELC 17

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    JMM KLELC 18

    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

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    3. Illegal cohabitation

    Englandpast consideration not valid ifpromise in writing to pay for illegalcohabitation

    Indiapromise to pay for-i. Adulterous cohabitation, past/ present/future void

    ii. Future cohabitation void

    iii. Past cohabitation to secure it in future voidiv. Past cohabitation only valid

    JMM KLELC 19

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    JMM KLELC 20

    Opposed to public policyAn agreement is unlawful if the court regards its

    object or consideration as opposed to publicpolicy

    publicpolicy 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 asmen of legal learningbut as experienced and

    enlightened members of the community representingthe highest common factor of public sentiment andintelligence

    Eg. Surrender of rights, sale of seats in public offices,etc.

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    JMM KLELC 21

    Heads ofPublic Policy

    Tradingwith

    Enemy

    Traffickingin

    PublicOffice

    Interferencewith

    Administration

    ofjustice

    Interferencewith

    Courseof justice

    ShiftingProsecution

    Maintenanceand

    Champerty

    MarriageBrokerage

    contracts

    Unfair orUnreaso-

    nabledealings

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    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.

    JMM KLELC 22

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    2. Trafficking in Public offices

    An agreement with a public officer toact corruptly is contrary to public

    policy.

    Agreement to provide money to aparliamentarian to influence his

    judgment

    sale of public offices in consideration

    of money .JMM KLELC 23

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    3 Interference with Administration

    of Justice

    Interferencewith course of

    justice

    Shiftingprosecution

    Maintenance &Champerty

    JMM KLELC 24

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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

    JMM KLELC 25

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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 policyEg. Service contracts.

    JMM KLELC 26