Professional Documents
Culture Documents
Contracts Project
Contracts Project
FACULTY OF LAW
contracts
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ACKHOWLEDGEMENT
I would really like to thank for giving me such wonderful topic to research on and
prepare a research paper. She also guided me throughout the process of the making
of the draft.
I would also like to thank God for giving me strength to complete my final draft. I
would like to thank my mother for encouraging me to work on the topic. Last but
not the least I would like to thank my friends who helped me to find more on the
topic and prepare a research paper of my best efforts.
.manik kapoor
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TABLE OF CONTENTS
1. INTRODUCTION______________________________________________4
2. CATEGORISATON____________________________________________5
Trading with Enemy 5
Trafficking in Public Offices 6
Interference with Administration
Of Justice 6
3. CONTRIBUTION____________________________________________11
4. CONCLUSION______________________________________________12
5. BIBLIOGRAPHY____________________________________________13
INTRODUCTION
According to the sec. 2(g) of the Indian Contracts Act 1872 “An agreement
enforceable by law is a contract”. The contract has to be valid and should have
fulfilled certain requirements before it is called a contract. One of the essentials of a
valid contract is that the consideration and the object should be lawful. Every
agreement of which the object or consideration is unlawful is void1. Section 23 of the
contracts act states the conditions under which a contract is lawful.
1
Sec. 23. Indian Contracts Act. 1872
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If a contract which is formed is against the public policy, the contract is deemed to
be void. If the court regards an agreement as opposed to public policy, the agreement
is void. Public policy is not capable of any precise definition. Public policy means the
policy of the law at a states time. An act which is injurious to the interest of the
society is against public policy.
This project is made to categorise these unlawful; laws under different heads and
also to differentiate between the laws in England and India.
Under legality of object the agreement which are void can be categorised under
following heads.
CATEGORISATION
The agreements which are termed to be void or against the public policies are
categorised as under:-
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3. Interference with administration of justice;
4. Marriage brokerage contracts;
5. Unfair or Unreasonable Dealings.
Some other agreements, which are opposed to public policy, like an agreement in
restraint of marriage3, an agreement in restraint of trade4 have also been declared void
by the Indian Contracts Act.
3
Sec. 26 Indian Contracts Act.
4
Sec 27 Indian Contracts Act.
5
Case Janson v. Driefontein Consolidated Mines, (1902) A.C. 484
6
[1925] 2 KB 1.
7
AIR 1974 SC 1892.
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3. INTERFERENCE WITH ADMINISTRATION OF JUSTICE –
A contract whose object is interfere with the administration of justice is void
in the eyes of law as it is opposed to the public policy. With reference to
such administration this heading can be categorised further as -
Interference with the course of justice – Any agreement which
obstructs the ordinary process of justice is void. An agreement to delay
the execution of a decree and a promise to give money to induce a
person false evidence, have been held void.
ILLUSTRATION
In N.V. P. Pandian v. M. M. Roy8 case, the respondent paid a sum of
Rs. 15,000 to the appellant and the appellant in return promised to use
his influence with the selection committee in order to get a seat for
the respondent’s son in Madras Medical College. The respondent’s son
could not have the seat and she filed a suit against the appellant
claiming back the sum of Rs. 15,000 paid by her. It was held that the
agreement tended to injure public service and was against public policy
and therefore, the same was void. Hence, she was held not entitled to
claim the refund of Rs. 15,000.9
8
AIR 1979 Mad. 42
9
Bangia, R. K. “Indian Contract Act”. Allahabad : Allahabad Law Agency, ed. 12, 2005.
10
AIR 1965 S.C. 166.
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criminal prosecution. It was held that such hypothecation was valid as
such was contemplated before the complaint was lodged.
In this case SC said –
“It is well settled that agreements which are made for stifling
prosecution are opposed to public policy and as such, they cannot be
enforced. The basis for this position is that the consideration which
supports such agreement is itself opposed to public policy.”11
11
Ouseph Poulo v. Catholic Union Bank, AIR 1965 SC 166.
12
AIR 1940 P.C. 19
13
ibid.
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ILLUSTRATION
Taking the case of Khaja Moinuddin v. S.P. Ranga Rao®14 into view
as another illustration for the same law in Indian context.
[In this case there was an agreement according to which the plaintiff
agreed to finance defendant’s litigation and in return the defendant
agreed to pay 40% of the total compensation to be paid to suit
scheduled land in case of its acquisition or in the alternative 40% of
the sale proceeds of land property, if sale was by private negotiation.
This was in addition to the repayment of the amount agreed to be
advanced. The agreement was held to be unconscionable and
extortionate in nature. It was held that the said agreement was
champertous in nature and void ab initio under Sec. 23 of Indian
Contracts Act.]15
14
AIR 2000 A.P. 344.
15
Bangia, R. K. “Indian Contract Act”. Allahabad : Allahabad Law Agency, ed. 12, 2005.
16
(1905) 2 KB 123
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5. UNFAIR OR UNREASONABLE DEALINGS –
When the parties are not economically on equal footing with respect to the
bargaining power of the two parties and one party is in a position to exploit
the other party and the other party is vulnerable in such respect then the
agreement is termed to be as opposed to the public polcy and may be termed
to be void in the eyes of law.
In the case of Central Inland Water Transport Corpn v. Brojo Nath
Ganguly17 case, the decision was that, a Government Corporation imposing
upon a needy employee a term that he can be removed just by three months
notice or pay in lieu of notice and without any grounds is an exploitation and
such ruthless exploitation is against public policy.
While on the other hand if the bargaining power of the two parties are fairly
matched then and al the clauses has been duly signed then the law will
presume such contract to be fair.
CONTRIBUTION
The research paper made on the topic “agreements against public policy with respect
to Indian and English laws” contains the categories under which this law is
distributed and the cases which have formed milestones in the development of this
law.
My contribution to this research paper is that I tried to elaborate this law under al
the headings and tried to discuss all the milestone cases which have formed the
precedents in the recent past. I have gone through the books written by great authors
like Mr. R. K. Bangia and Avtar Singh and tried to bring out, where possible the
common law which has formed precedents in the Indian law.
17
AIR 1986 SC 1571
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I tried to discuss the cases of the common law and cases of the Indian law
separately and tried to draw out how they formed the counterparts of each other by
discussing the decision passed by the court.
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