Legality of object

unlawful agreements
23. What consideration and objects are lawful, and what not.—The consideration or object
of an agreement is lawful, unless—
1)it is forbidden by law;
2)or is of such a nature that, if permitted, it would defeat the provisions of any law;
3)or is fraudulent;
4)or involves or implies, injury to the person or property of another;
5)or the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful.
Every agreement of which the object or consideration is unlawful is void.
Difference

Unlawful agreements
Forbidden by law. Does not affect collateral agreements. Need not be illegal.
Opposed to law but may not be a crime.

Illegal agreements
Prohibited by law. Affects collateral agreements. Al illegal agreements are
unlawful. Opposed to public policy. It is a crime
An agreement will not become a contract or will remain unenforceable, if iot is made for an
unlawful consideration and with an unlawful object.
The consideration object of an agreement is unlawful in the following cases.
If it is forbidden by law
The expression “forbidden by law” is not synonymous with the word “void” and hence it is
not necessary that whatever is void is also forbidden by law. Forbidden by law means an act
forbidden by Indian Penal Code or by special legislative enactments, regulations and orders.
The expression “public policy” means and includes a wide range of topics such as trading
with the enemies in times of war, stifling prosecutions, champerty and maintenance and
various other topics which include certain recognized matters.
Law is in connection means the law for the time being in force
in India, and therefore, includes Hindu and Mohammaden laws
also and also principles of unwritten law. A simple illustration is
the slae of liquor without license and the sale was was
considered to be void and the price irrevocable.
Nandlal v Thomas J Williams,
Bhikanbhai v Hiralal, ILR 1900 24 Bom 622
Thithi pakurdasu v Bheemudu, ILR 1903 26
Mad 430
2) If permitted defeat the provisions of law
Sometimes the object of or consideration for an agreement is such that though not directly
forbidden by law, it would, if permitted, defeat the provisions of any law. void
Fateh singh v Sanwal Singh, ILR 1875
Ragazzoni v K.C.Sethia 1956, 2 QB 490
Foster v Driscoll, 1929 1 Kb 470
Howard v Shirlstar container transport ltd
3)Fradulent

Atamal Ramoomal v Deepchand Kessurmal, AIR 1939

4) If it involves or implies injury to the
persons or property
Giles v giles, 1971
5) If the courts regards it as immoral
1)Cohabitation
Nagaratnamba v Ramayya, AIR 1968 SC 253
Agreement for furtherance of sexual immorality

2)Pearce v Brooks, 1866 LR 1 Exch 213

Upfill v Wright, 1911 1KB 506
Beaumount v Reeves 1846
3)Seperation between wife and husband
Devi v Sulekha Kundu
4) Marital relations
Baivijili v Nansa Nagar, ILR 1885 10 Bom 152
Fender v John Mildmay, 1938 AC 1, 723
Wilson v Carnley,
The term “public policy” does not admit of any definition. The
existing heads of policy are: (1) By tending to the prejudice of
the state. It may be further divided into following two sub-
heads: (a) Trading with enemy (b) Sale of public offices and
appointments. (2) By tending to the perversion of or
interference with the administration of justice. It may also be
divided into the following heads: (a) Perversion or interference
in justice - (i) Maintenance; (ii) Champerty; (b) Agreement to
stifle prosecution. (3) Violation of public decency.It is
equivalent to the policy of the law.
Trading with enemy
Trafficking in public offices
N.V.P. Pandian v M.M.Roy, AIR 1979 Mad
42
Inteference with Administration of justice
Interference with court of justice and stifling
Prosecution
William v Baley, 1866 LR 1HL 200
Marriage brokage contracts
Girdhari singh v Neeladhar Singh, 1972 10 AII
LJ 159
Unfair unreasonable or unconscionable dealings
and dealings with employees
Agreements interfering with parental duties
Giddu Narayanish v Mrs. Annie Besant,
Agreements creating monopolies
Maintenance and champerty
Agreements to defraud creditors or revenue
authorities
Agreements in restraint of marriage is void Sec 26
Every agreement in restraint of marriageof any person, otherthan
a minor is void
Lowe v Peers, 1768
Maharam Ali aysha Khatun, 1914 19 CWN 1226
Rao Rani v Gulab Rani ILR 1942 All 810
Santoshkumari v surjit singh
Agreements in restraint of trade is void sec 27

Madhub Chander v Raj Coomar, 1874 14 Beng LR 76

Nordenfelt v Maxim Nordenfelt Guns & ammunitions co, 1894 AC 535
Khemchand and Manikchand v Dayaldass Bassarmal,
Oakes &Co. v Jackson,
Electrosteel Castings Ltd v Saw Pipes Ltd, 2005 1 HN 612
Exceptions
1)Sale of goodwill
Chandrakant Das v Parasullah Mullick
2)Restrictions against partnership firm
Partners competing business
Rights of outgoing partner
Partner’s similar business on dissolution
Restrictions imposed by the purchaser of goodwill against partners of dissolved firm
3) Agreement between members of a trade union
4) Restrictins imposed by trade combinations on member
firms
Fraser 7co v Bombay Ice co
Restrains upon employees
Mangan lal v ambica mills ltd
Brahmaputra Tea company v Scarth
Niranjan Shankar golikar v Century spinning and
Manufacturing company