1. UNLAWFUL OBJECTS AND CONSIDERATION
Through this Article we shall attempt to make you understand about Consideration as the blood of the Contract and Exclusively Void Contracts. Let us find out:-
1.1. Section 23: What considerations and objects are lawful, and what not.
- One of the requirements for the formation of a valid contract is that parties must contract for a lawful object. Section 23 renders certain considerations and objects as unlawful.
- The consideration or object of an agreement is lawful if it is not forbidden by the 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.
The aforementioned aspects are the ones in which the consideration or object of an agreement is said to be unlawful. Hence, the agreements which have an unlawful object or consideration are void.
Illustrations according to The Indian Contract Act 1872:
- “A agrees to sell his house to B for 10,000 rupees. Here B’s promise to pay the sum of 10,000 rupees 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 the 10,000 rupees. These are lawful considerations.
- B and C enter into an agreement of 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 1000 rupees to A. The agreement is void, as the consideration for it is unlawful.
1.2. Distinction between Object and consideration
- Both the illegality of the object and consideration is covered by Sec. 23. There is a misconception among many minds that “object” and “consideration” means the same
- Although, may in some cases they may be the same thing but usually they are different.
Illustration: where money is borrowed for the purpose of the marriage of a minor, the consideration for the contract is the loan and the object, the marriage. In a case of this kindbefore the Madras High Court, the court found that the marriage in question was hit by the provisions of the Child Marriage Restraint Act of 1929. “The purpose for which the guardian borrowed the money is to celebrate the marriage of a child which is an offence under the Act.” Thus, the object was to defeat the Provisions of the Child Marriage Restraint Act.
2. VOID AGREEMENTS
Sections 24 to Sec. 30 and Sec 56 of the Indian Contract Act, 1872 lay down the provisions of void agreements
2.1. Section 24: Agreement void, if considerations and objects unlawful in part.
Section 24 of the Indian Contract Act, 1872 provides that if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.
Illustration
- A promises to superintend, on behalf of B, a legal manufacture of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year. The agreement is void, the object of A‟s promise, and the consideration for B‟s promise, being in part unlawful.”
This section is brought to light when a part of the consideration of an object or more than one objects of an agreement is unlawful and the result of which would be that the whole agreement would be deemed void unless the unlawful part can be severed without any damage to the lawful portion.
2.2. Section 25: Agreement without consideration, void
Sec 25 of the Indian Contract Act, 1872 provides that an agreement without a consideration is void.
However there are some exceptions to the same:
2.3. Section 26. Agreement in restraint of marriage, void:
- Every agreement in restraint of the marriage of any person, other than a minor, is void.
This is because of the fact that every person has got a right as well as freedom of choice to marry. If an agreement is made interfering in this right, that is unlawful.
- Though, marrying is not an obligation under the law but an agreement which restrains a person from marrying, thereby hindering his freedom of choice is in contravention to the public policy and therefore, unlawful.
- Partial or indirect restrains on a person’s marriage also come within the purview of this act along with direct restrains. The same was held in the case of Rao Ram v. Gulab.
The position is however different under English Law which covers only complete restrains on marriage.
- However, when the marriage prohibited is a second marriage when the first spouse is still alive (Bigamy). The same acts as an exception under various personal laws.
2.4. Sec 27: Agreement in restraint of trade, void:
An agreement which restrains a party to exercise a lawful profession, trade or business of any kind is void to that extent.
Exceptions:
- One who sells the good-will of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the good-will from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business.
2.5. Section 28. Agreements in restraint of legal proceedings
Under Sec. 28 of the Indian Contract Act, 1872, an agreement by the virtue of which any party thereto is absolutely restricted from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent.
Exceptions:
- When the parties decide to solve their disputes by arbitration which arise or have already arisen, the agreement is not void.be recoverable in respect of the dispute so referred.
Another aspect to be noted is that only absolute restraints are void. Partial restrictions will be valid.
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