Chapter-6

Legality of Object
When Consideration or Object is unlawful
• A contract must not be only based upon
mutual assent of competent but must also
have a lawful object.
• If the object of an agreement is the
performance of an unlawful act, the
agreement is not enforceable.
• Sec.23 declares that the ‘object’ or the
‘consideration’ of an agreement is not lawful
in certain cases
 ‘Object’ or the ‘Consideration’ of an agreement is not lawful

1. If it is forbidden by the law

• ‘Object’ or the ‘Consideration’ of an agreement is
doing of an act forbidden by the law.
• Forbidden act -Punishable by the criminal law
• Prohibited by special legislation or regulations
made by a competent authority under power
derived from the legislature
• For example “A” promises to obtain for “B” an
employment in the public service and “B”
promises to pay Rs. 1000 to “A”. The agreement is
void as its object is unlawful.
2. If it is of such nature that, if permitted, it would
defeat the provisions of any law
• Not directly forbidden by the law but it would defeat
the provisions of any law, the agreement is void

• “A” was licensed under excise Act to run a liquor

shop. The act forbade the sale transfer or sub lease
of the license or the creation of a partnership to run
the shop. ‘A’ took ‘B’ into partnership. Held, the
agreement was void.
3. If it is fraudulent

An agreement which is made for a fraudulent

purpose

“A”, being agent for a landed proprietor, agree for

money, without the knowledge of his principal, to
obtain for B a lease of land belonging to his
principal. The agreement between A and B is void.
4. It involves or implies injury to the person or
property of another

Injury means ‘wrong’, ‘harm or ‘damage’

Person mean one’s body

Property includes both movable and immovable

5. If the court regards it as immoral

• An agreement between a husband and wife for

future separation, is unlawful

• An act of sexual immorality

6. Where the Court regard it as opposed to public policy
• Harmful to the public welfare
• Against the public goods or public welfare
i. Agreement of trading with enemy
ii. Agreement to commit a crime
iii. Agreement which interfere with administration of justice
iv. Agreement in restrain of legal proceeding
v. Trafficking in public office and titles
vi. Agreements tending to create interest opposed to duty
vii. Agreements restraining personal liberty
viii. Agreement in restrain of marriage
ix. Marriage brokerage agreement
x. Agreement interfering with marital duties
xi. Agreement to defraud creditors or revenue authorities
xii. Agreement in restrain of trade (exception sale of goodwill and
partners’ agreement, trade combination, service contract)
 Unlawful and Illegal Agreements
• An unlawful agreements is one which, like a void
agreement, is not enforceable by the law. It is
void ab intio and destitute of legal effects
altogether. 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
 Effects of illegality
• Ex turpi causa non ortur action – No action
arise from a base cause
• In pari delicto, potior est conditio defendentis
– incase of equal guilt, the defendant is in a
better position
• Law will help neither party to the agreement
• “A” promise to pay “B” Rs. 500 if he (“B”)
beats “T”. If B beats T, he cannot recover the
amount if ‘A’ refuse to give
 Whether illegality is severable
• Several act
• Some are legal and some are illegal
• Part of which legal and other part illegal
• If legal part cannot be separable the whole contract
is declared illegal
• Reciprocal - Sell house and if use for gambling pay
Rs. 50,000 extra
• Alternative branch of promise is illegal – either rice
or smuggled opium
• Several object and single consideration which is
illegal the whole contract is void
Chapter - 7
 What is void Agreements?
An agreement, though it might possess all the
essential elements of a valid contract must not
have been expressly declared as void by any law
in force in the country. The Contract Act
specifically declares certain agreements to be
void. A void agreement is one which is not
enforceable by law (sec.2 (g). Such an
agreement does not give rise to any legal
consequences and is void ab intio
Agreements expressly declared to be void by
the Contract Act
1. Agreements by incompetent parties (Sec.11)
2. Agreements made under a mutual mistake of fact (Sec.20)
3. Agreements the consideration or object of which is unlawful (sec. 23)
4. Agreements the consideration or object of which is unlawful in part (sec.24)
5. Agreements made without consideration (sec.25)
6. Agreements in restrain of marriage (sec.26)
7. Agreements in restrain of trade (sec. 27)
8. Agreements in restrain of legal proceedings (sec.28)
9. Agreements the meaning of which is uncertain (sec.29)
10. Agreements by way of wager (sec.30)
11. Agreements contingent on impossible events (sec.36)
12. Agreements to do impossible acts (sec.56)
13. In case of reciprocal promises to do things legal and also other things illegal,
the second set o reciprocal promise is a void agreement (sec.57)
 Wagering Agreement
• Promise to pay money or money’s worth
• Uncertain event
• Each party must stand to win or lose
• No control over the event
• No other interest in the event
 Void Contracts
1. A contingent contract to do or not to do
something on the happening of an event
becomes void when the event become
impossible
2. A voidable contract become void when the
party whose consent is not free repudiates the
contract
3. A contract become void by supervening
impossibility or illegality
 Restitution
When a contract become void, the party who has
received any benefit under it must compensate
the other party by the value of the benefit. This
restoration of the benefit is called ‘restitution’.
The principal of restitution is that a person who
has been unjustly enriched at the expense of
another is required to make restitution to that
other. In essence, restitution is not based on loss
to the plaintiff but on benefit which is enjoyed by
the defendant at the cost of the plaintiff which is
unjust for the defendant to retain.
 Consequence of recession of voidable
contract
When a person at whose option a contract is
voidable rescinds it, the other party thereto
need perform any promise therein contained in
which he is promisor. The party rescinding a
voidable contract shall, if he hate received any
benefit thereunder from another party to such
contract, restore such benefit so far as may be to
the person from whom it was received.
 Contingent Contract
• A Contract may be – an absolute contract or
contingent contract
• absolute contract – without any condition
• A contingent contract is a contract to do or
not to do something. If some event, collateral
to such contract, does or does not happen.
Where for example, goods are sent on
approval, the contract is contingent contract
depending on the act of the buyer to accept
or reject the goods
1. Contingent contracts depends on the happening of an
uncertain future event cannot be enforced until the event
has happened. If the event becomes impossible, such
contract become void.
2. When Contingent contract is to be performed if a particular
event does not happen, its performance can be enforced
when the happening of that event become impossible
3. If a contract is Contingent upon how a person will act at an
unspecified time, the event shall be considered to become
impossible when such person does anything which renders it
impossible that he should so act within any definite time, or
otherwise than under further Contingencies
4. Contingent contracts to do or not to do anything, if a
specified uncertain event happens within a fixed time, may
be enforced if the event does not happen or its happening
become impossible before the expiry of that time
5. Contingent contracts to do or not to do anything, if an
impossible event happens, are void, whether or not the fact
is known to the parties
 Difference between Wagering
Agreement and Contingent contract
• A wagering agreement consist of reciprocal
promises
• A wagering agreement is of contingent in nature
but contingent contact cannot be wagering
• A wagering agreement is void but contingent
contract is not be void
• Interest in Winning and losing
• Future event is sole determining factor while in
contingent contract it is collateral to contract