Legality of Object and Void Agreements

Agreements against Public Policy.

1. Agreements of trading with enemy.

2. Agreement to commit a crime.

3. Agreements interfering with

administration of justice.

4. Agreements in restraint of legal

proceeding.

5. Trafficking in public offices and titles.

Agreements against Public Policy.

6. Agreements tending to create interest opposed to public duty:-

which is against to his public policy or professional duty.

7. Agreements in restraint of parental rights. A father and mother , in the absence of

any one , the other is the legal guardian of the child. No parent can barter away from this right . No parent can enter into any agreement which is against his duty. No parent has the right to sell their child.

Case

A father having two minor sons agreed to transfer their guardianship in favour of Mrs. Annie Besant and also agreed not to revoke the transfer. Subsequently, he filed a suit for recovery of the boys and a declaration that he was the rightful guardian.

Agreements against Public Policy.8. Agreements restricting personal liberty. Harwood (employee) wants to take loan

from Millers Timber and Trading Company (owner) and the owner puts on the following conditions which are unlawful practically:

You should not leave the job. You should not borrow money from

others. You should not change your residence. You should not sell your property.

Agreements against Public Policy.

9. Agreements in restraint of marriage. Marriage is the right of every individual

and every person has right to marry an one of

their choice. EX. A boy tells a girl that he will marry her

but later marries another girl of his choice , in this situation the girl files a case and wanted compensation of 2000

Agreements against Public Policy.10. Marriage brokerage

agreements. An agreement to procure bride

or groom for money is void. A sum of money was agreed to

be paid to the father in consideration of his giving his daughter in marriage.

Agreements against Public Policy.11. Agreements interfering with marital duties

A promise by a married person to marry, during the life time after a death of spouse.12. Agreements to defraud creditors or revenue authorities

If any employee gets an allowance more than the

actual expenses incurred , it is unlawful.

Agreements against Public Policy.13. Agreements in restraint of trade.

Every person has freedom to do whatever job/business/profession he wants provided its lawful . if any person stops the other person from doing such lawful business then it is invalid.

EX. Both of them doing the same business Madhav tells to raj “I’ll pay you money and you close your business”.

Raj does not closes his business . Can Madhav file a case on Raj .

Case

J, an employee of a company, agreed not to employ himself in a similar concern within a distance of 800 miles from Madras after leaving the company’s service.A and B carried on business of braziers in a certain locality in Calcutta. A promised to stop business in that locality if B paid him Rs. 900 which he had paid to his workmen as advances. A stopped his business but B did not pay him the promised money.

13. Agreements in restraint of trade. Exceptions- Sale of Goodwill Partners agreements 54, 55(3) ).

A partner should not carry on the same business as

that of the firm. ( sec. 11 (2) )An outgoing partner may agree with the firm that he

will not carry on the same business as that of the firm in the specified area . (sec. 36 (2) )

13. Agreements in restraint of trade.Exceptions:-Partners agreementsPartners may do anticipation of the

dissolution of the firm may agree among themselves that some partners may not carry on the same business as that of the firm within specified local area or for specified time. (sec 54 )

When the goodwill of the firm is sold any partner may agree with the buyer that he will not carry on the same business within specified local area. ( Sec 55.(3) )

Agreements in restraint of trade. Exceptions:-Trade Combinations Service Contracts

Void AgreementsVoid agreement is one which is not enforceable by law (Sec. 2 (g) )Void Agreements are

1.Agreement by incompetent parties (Sec.11 )

2.Agreement made under a mutual mistake of fact (Sec.20 )

3.Illegal agreements. (Sec. 24 )4.With out consideration. ( Sec. 25) 5.Restraint of marriage.( Sec. 26 )

Void Agreements are

6. Restraint of trade.(Sec. 27) 7. Restraint of legal proceedings.

(Sec. 28)8. Uncertain agreements.(Sec. 29)9. Wagering agreements.(Sec.30)10.Contingent on Impossible

events (Sec. 36)11.Impossible agreements.(Sec.56)

Agreements the meaning of which is uncertain [Sec. 29]The uncertain may be I. Existence of II. Quantity ofIII. Quality of IV. Price of V. Title to, the subject matter.

Agreements by way of wager [Sec 30]:Wager means betting . wagering agreement

means where one person promises to pay money or money’s worth on the happening of uncertain event while the other promises to pay if the event does not happen.

Examples: A and B bet as to whether it would rain on a particular day or not A promising to pay Rs. 100 to B if it rained, and B promising an equal amount to A, if it did not. This agreement is wager.

Wagering Agreement Void and not Illegal

Essentials of wagerThere must be a promise to pay money or money’s worth. The event must be an uncertain one. Each party must stand to win or lose under the terms of agreement. No control over the events.No other interest in the event.

Agreements by way of wager [Sec 30]:Exceptions

Transactions for the sale and purchase of stocks and shares.Prize competitions which are games of skill, e.g., picture puzzles, athletic competitions.A crossword competition is not a wager since it involves skill

Agreements by way of wager [Sec 30]:Exceptions

4.Contracts of Insurance. Contracts of insurance are not wagering agreements even though the payment of money by the insurer may depend upon a future uncertain event. Contracts of insurance differ from the wagering agreements in the following respects:(a) It is only person possessing an insurable interest that is permitted to insure life or property, and not any person, as in the case of a wager.

Agreements by way of wager [Sec 30]:Exceptions

(b) In the case of fire and marine insurance, only the actual loss suffered by the party is paid by the company, and not the full amount for which the property is insured. Even in the case of life insurance, the amount payable is fixed only because of the difficulty in estimating the loss caused by the death of the assured in terms of money, but the underlying idea is only indemnification.(c) Contracts of insurance are regarded as beneficial to the public and are, therefore, encouraged.