LEGALITY OF OBJECT AND CONSIDERATION
Legality of object and consideration is one requirements for a contract to be enforceable. Any contract to do an illegal act is unenforceable even if the consideration has been paid. The court won't even make the other person give you your money back if you paid someone to commit a crime and that person later refused. Technically, that is a breach of contract, but since the object of the contract (commission of a crime) is illegal, the contract is unenforceable in the courts. Section 13 of the Contract Act 2056 has declared, "A contract is void if it has an illegal object". Sec 13(f) says "A contract is to be void which has the objective against morality or public welfare or public policy.
Any agreement, for its enforceability in the court, its objectives and consideration must be lawful. Thus, for a valid contract both the object and consideration must be lawful. Section 13(K) of the Contract Act 2056 states, "The Contract which has an illegal objective and consideration will be void". In other words the agreement must not have been one which has been expressly declared to be void under the Act.
According to sec. 23 of Indian Contract Act 1872, the object and consideration of an agreement is lawful, unless:
· It is forbidden by law, or
· It is of such a nature that, if permitted, it would defeat the provisions of any law, or
· It is fraudulent, or
· It involves or implies injury to the person or property of another, or
· The court regards it as immoral, or opposed to public policy.
UNLAWFUL AGREEMENTS (Circumstances in Which Objects and Considerations of an Agreement are Unlawful)
Followings are the circumstances, in which, as per the provision made in sec. 23, the objects and considerations are unlawful:
(a) If it is forbidden by law :
Any acts or omission or transactions or business which is punishable by the criminal law of the country or by any special legislation are considered to be forbidden by law.
Example
In a case one party sales goods to another and he knows that the sold goods will be smuggled out of the country. The act is unlawful. Hence, it is void.
(b) If it is of such a nature that, if permitted, it would defeat the provision of any law:
If the object and consideration of an agreement is not forbidden, and provided permission to be performed by law, it may defeat the legal provisions of the laws of the country. In such situation, this nature of agreements are not given permission and declared VOID.
Example
Napier agrees to enter into N.B.'s service in consideration of a weekly wage of Rs. 100 and weekly expense allowance of Rs. 20. Both are aware that the expense allowance is a device to conceal the revenues. Hence, the agreement is void because it defeats the provisions of law. (CASE: NAPIER vs. N.B. AGENCY LTD. (1951) 2 ALL E.R. 264)
(c) If it is fraudulent
The object of such agreement is to cheat the other party by concealment of any material fact or otherwise. An agreement, entered into between the parties with a fraudulent purpose or to perpetrate fraud on others, is unlawful.
Example:
Amar, Bikash and Chanchal enter into an agreement for division among them of gains acquired or to be acquired from Tarun fraudulently. The agreement is void as being the object unlawful.
(d) If it involves or implies injury to the person or property of another
An agreement, the object of which is to injure the person or property of another, is unlawful. An agreement to commit a crime or to compel a debtor to do manual labour for a creditor as long as the debt is not paid is unlawful and void.
(e) If court regards it as immoral or opposed to public policy
"LORD MANSFIELD", in the case HONES vs. RANDALL (1774), opins that "a contract contra bones mores (contrary to good moral) in illegal.
Example I:
A person, who knowingly lets out his house for prostitution, cannot recover the amount of rent thereof, because the purpose has been immoral.
Example II:
HariRam, who is Ragho Ram's mukhtiar promises SitaRam to exercise his influence with RaghoRam in favour of SitaRam and SitaRam promises to pay Rs. 10,000 to HariRam. The contract is void because it is immoral.
In the same manner, the agreement shall be unlawful, if the court regards it as being opposed to public policy. Any agreement which tends to promote corruption or injustice or is against the interest of the public is considered to be opposed to public policy.
Example:
Trading with alien enemy, an agreement interfering with course of justice, champerty and maintenance, traffic in public office, agreement creating an interest opposed to duty, agreement restraining personal freedom, agreement interfering with parental duties, agreement interfering with marital duties and marriage brokerage.
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