Legality of object

1. Amity Business School
Legality of Object
Amity Global Business School,
Bhubaneswar
Amity Global Business
School, Bhubaneswar

2. Amity Business School
Legality of Object
• A contract must not only be based upon mutual assent of
competent parties but must also have a lawful object.
• If the object of an agreement is the performance of an
unlawful act, the agreement is unenforceable.
• The words ‘object’ and ‘consideration’ are distinct in meaning.
• The word object means purpose or design.
• In some cases, consideration for an agreement may be lawful
but the purpose is unlawful. In such cases the agreement is
void.

3. Amity Business School
When Consideration or Object is Unlawful (Sec. 23)
• If it is forbidden by law
• If it is of such a nature that, if permitted, it would defeat
the provision of any law
• If it is fraudulent
– Example- A enters into a contract with B where he agrees to pay
B if he embezzles money from C. This is considered a fraudulent
object and the contract is not valid.

4. Amity Business School
• If it involves or implies injury to the person or property of
another
– Examples: Publishing a book on the life of a person without his
consent. Destruction of a property. Violation of licenses.
Violation of copyrights.
• If the court regards it as immoral
– Example: A lends money to B on the condition that B will
divorce C, and later get married to A. If B does not divorce C,
then A cannot pursue legal proceedings against B to recover the
money. The basic premise of this contract is immoral so it will be
deemed void.

5. Amity Business School
• Where the court regards it as opposed to public policy
– Entering into an agreement with a party that belongs to a country
with which India does not have peaceful relations, makes the
agreement void.
– Agreements to create monopolies.

6. Amity Business School
Unlawful and Illegal Agreements
• An unlawful agreement is one which, like a void
agreement is not enforceable by law. It affects only the
immediate parties and has no further consequences.
• An illegal agreement, on the other hand, is not only void
as between immediate parties but has this further effect
that the collateral transactions to it also become tainted
with illegality.
• An agreement to commit a crime or trot
• E.g., An agreement to assault A or an agreement to
publish a libel is illegal.

7. Amity Business School
• ‘Every illegal agreement is unlawful, but every unlawful
agreement is not necessarily illegal’.
• It is sometimes difficult to decide as to weather an act is
illegal (or) unlawful because, as many of the illegal and
the unlawful acts lie on the borderline.
• It may, however, be observed that illegal acts are those
which are opposed to public morals and unlawful acts
are those which are less rigorous in effect and involves a
‘non-criminal breach of law’.
• These acts do not effect public morals (nor) do they
results in the commission of crime.

8. Amity Business School
Effects of Illegality
• No action is allowed on an illegal agreement.
– The law discourages people from entering into illegal agreements.
• The collateral transactions to an illegal agreement also
become tainted with illegality
• No action can be taken for the
– Recovery of money paid or property transferred under an illegal
agreement
– Breach of an illegal agreement
• L lends Rs 50000 to B to help him to purchase some prohibited
goods from T, an alien enemy. If B enters into an agreement with T,
the agreement will be illegal and the agreement between B and L
shall also become illegal, being collateral to the main transaction
which is illegal. L cannot recover the amount. Ha can recover the
amount if he did not know of the purpose of the loan.

9. Amity Business School
Agreements Opposed to Public Policy
• Agreements of trading with enemy
– If any contract is made with an alien enemy without the
government’s permission, it is considered as illegal.
– An alien enemy is a person who holds the citizenship of a
country, having war with India.
• Agreements which interfere with administration of justice
– Interference with the course of justice
• An agreement which obstructs the ordinary
process of justice is unlawful. An agreement for
using improper influence of any kind with the
judges or officers of justice is unlawful.

10. Amity Business School
– Stifling prosecution
• It refers to making money out of crime and it is considered as
abuse of law. As per law, a person should be punished for
committing an offence, if the charges against him are proved
by court of law. An agreement for suppressing criminal
charges is illegal and void.
– Maintenance and champerty
• Champerty is a type of bargaining in which a third party offers
assistance in recovering property, and in return demands a
share of the recovered property.
• Maintenance implies helping a third party in litigation or
through financial help, and no benefits are attached.
• Both Champerty and Maintenance are illegal in the English
law but in India, it depends on the facts of the case.

11. Amity Business School
• Agreement to commit a crime
– A promises to indemnify B in consideration of his
beating C. the agreement is opposed to public policy.
• Agreements in restraint of legal proceedings
– Agreements restricting enforcement of rights
• An agreement which wholly or partially prohibits any party
from enforcing his rights under or in respect of any contract is
void to that extent.
– Agreements curtailing period of limitation
• Agreements which curtail the period of limitation
prescribed by the Law of Limitation are void because
their object is to defeat the provisions of law.

12. Amity Business School
• Trafficking in public offices and titles
– Agreements for sale or transfer of public offices and titles or for
the procurement of a public recognition like Padma Vibhushan or
Param Veer Chakra for monetary consideration are unlawful,
being opposed to public policy.
– An agreement to pay money to a public servant to induce him to
act corruptly or to retire and make way for the appointment of the
promisor or an agreement with voters to procure their votes for
monetary consideration are void on the ground of public policy.

13. Amity Business School
• Agreements tending to create interest opposed to duty
– P directs A, his agent to buy a certain house for him. A tells P
that it cannot be bought and buys the house for himself.
• Agreements in restraint of parental rights
– A father and in his absence the mother is the legal guardian of
his/her minor child.
– This right of guardianship cannot be bartered away by any
agreement.
– A father is entitled by law to the custody of his legitimate child.

14. Amity Business School
• Agreements restricting personal liberty
– Agreements which unduly restrict the personal freedom of the
parties to it are void as being against public policy.
• Agreements in restraint of marriage
– Every agreement in restraint of marriage of any person, other
than a minor, is void.
– P promised to marry L only and none else and to pay L a sum of
Rs 200000 if he married someone else. P married X. held, L
could not recover the sum agreed as the agreement was in
restraint of marriage.

15. Amity Business School
Cases
1. A borrows Rs 5000 from B to purchase certain
smuggled goods from C. Can B recover the amount
from A if he (a) knows A’s purpose for which he
borrows money (b) does not know A’s purpose?
2. X promises to drop prosecution which has instituted
against R for robbery and R promises to restore the
value of things taken. Can X reinforce this promise? If
so give reasons.

16. Amity Business School
3. A promise to pay Rs 5000 B who is an intended witness
in a suit against A in consideration of B’s absconding
himself at the trial. B absconds but fails to get the
money. Can he recover?
4. A’s wife B paid Rs 5000 to C to be given as a bribe to a
jailor for procuring release for her husband from jail.
The jailor failed to procure the release. Can B recover
the amount?

17. Amity Business School
Answer
• 1. a. No
b. Yes
2. No
3. No, as the agreement is unlawful, being opposed to
public policy.
4. No, as the agreement is unlawful, being opposed to
public policy.