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Legality of Object and Consideration

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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 void.

Section 23 mentions the circumstances when the consideration or object of an agreement is not lawful.

Sec. 23 What consideration and objects are lawful, and what not:

The consideration or object of an agreement is unlawful unless,

It is forbidden by law, or is of such nature that, if permitted, it would defeat the

provisions of law, or is fraudulent involves or implies injury to the person or property of another;

or the Court regards it as immoral or opposed to public policy.

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1. Forbidden by Law

When something is forbidden by law, an agreement to do that is unlawful. An agreement to do what has been prohibited by the Indian Penal Code or by some other law cannot be enforced.

A Contract to pay some money if a crime or a tort is committed is not enforceable.

If the law prohibits bigamy, a promise by a married man to marry another lady is unlawful. Even if the promise says that a man would marry a woman after his wife’s death, such a promise is not enforceable because such a promise tends to break up marriage, encourages immorality and often leads to commission of crimes.

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1. Forbidden by Law If the agreement does not satisfy the clear and

unequivocal requirements of a statute it is void. In Re Mahmoud and Ispahani, (1921) during the

war the sale of linseed oil without a licence from the Food Controller had been forbidden. The Plaintiff agreed to sell linseed oil to the defendant, on a false assurance from the defendant, that he had such a license. Subsequently, when the oil was supplied the defendant refused to accept the same on the ground that he had such a licence. In an action against the defendant for damages for breach of contract it was held that he was not liable as there was no valid contract between the parties.

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1. Forbidden by Law

Merely because a party does not observe certain statutory requirements does not mean that the agreement is void. The Court has to see the real purpose of the Act.

In Smith V. Mawhood, a statute required that a dealer in tobacco must hold a licence to sell the same and he should also have his name painted outside the place of his business and the failure to observe this rule attracted a penalty of £ 200. The plaintiff, who had sold tobacco without observing the abovestated statutory requirements, was held entitled to recover the price of the goods. In this case the real purpose of this Act was to impose a fine on the offending party for the purpose of the revenue, rather than to vitiate the contract itself.

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2. Defeat the provisions of any law

If the object or consideration of an agreement is of such a nature that, if it is permitted, it would defeat the provisions of any law, such an agreement is void. Certain acts may not be expressly forbidden by law, but if they result in circumventing any law, they cannot be encouraged.

In Sitaram V.s Harihur, (1911) the natural father paid a sum of Rs. 8,000/- to a widow to induce her to adopt his son. It was held that this payment was in the nature of a bribe and as such was illegal according to Hindu Law

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2. Defeat the provisions of any law In Abdul Pirojkhan Nabab V. Hussenbi (1904), the Plaintiff

and the defendant, who married under the Mahomedan law, agreed before marriage that the defendant (wife) would be allowed to live with her parents after the marriage. The wife went to her parents and refused to come back to her husband (plaintiff). He filed a suit for restitution of conjugal rights. Her defence was that she was permitted by the agreement made before the marriage, to live apart, and also that the husband had not paid her dower amounting to Rs. 1,000/-. It was held that the agreement before marriage permitting the wife to live separately was void in law. The Plaintiff was granted the decree for restitution of conjugal rights conditional upon payment by him of the stipulated dower of Rs. 1,000/-

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2. Defeat the provisions of any law

An agreement for future separation between a Mahomedan husband and wife is also void because the same is opposed to public policy.

However an agreement to do a thing not contrary to any provision of law or contrary to public policy, is not unlawful.

In Sukha Vs. Ninni, it has been held that although according to Mahomedan Law a man, who has begotten an illegitimate child, does not have a duty to maintain him but an agreement to maintain an illegitimate child is not unlawful, and is therefore not void. Maintenance of illegitimate children, it was further observed, is in consonance with public policy in India.

Justice B.P. Bedi, said “ An agreement to maintain an illegitimate child for which the Mohammedan Law as such makes no provision, will in my opinion not have the effect of defeating the provisions of any law …………………………………….. I am, therefore, not prepared to hold that the consideration for the agreement if permitted would defeat the provisions of any law”.