Theoretical overview
Legality of Object (Sec-23)
S. 23 of the Indian contract act states as to what considerations and objects are lawful, and what are not. The word ‘object’ in Section 23 of the Contract Act was not used in the same sense as ‘consideration’, but was used as distinguished from consideration and means ‘purpose’ or ‘design’.The consideration or object of an agreement is lawful, unless-
Forbidden by law
Law” in this connection means the law for the time being in force in India. Sometimes the object of, or the consideration for, an agreement is such that though not directly forbidden by law, it would, if permitted, defeat the provisions of any law. Such an agreement is also void. Where the violation of a home or foreign law would not be an affront to public conscience, enforcement may be allowed.
Section 24 states that Agreements are void, if considerations and objects unlawful in part. If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.
Section 25 declares that an agreement without consideration is void. This is, of course, subject to a few exceptions, which have already been considered along with “consideration”. S. 26 states that every agreement in restraint of the marriage of any person, other than a minor, is void. S. 27 states that Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
S. 28 says that agreements in restraint of legal proceedings are void.—
Every agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent.
Effect of Imparting Jurisdiction in Foreign Tribunals
If the agreement says that disputes are subject to jurisdiction of foreign courts and not of Indian courts, the agreements are void. Exception to it- If an agreement bars the jurisdiction of courts in the country, and places jurisdiction only with the arbitration tribunal created by the parties, such an agreement will not be void.
Section- 29– Agreements whose meaning cannot be ascertained, and agreements, the meaning of which are incapable of being made certain, those agreements are void. If the meaning is capable of being made certain, it is not void.
S.30. Agreements by way of wager, void.—Agreements by way of wager are void;and no suit shall be brought for recovering anything alleged to be won on any wager,or entrusted to any person to abide by the result of any game or other uncertain event on which any wager is made.
Exception in favour of certain prizes for horse racing.—This section shall not be deemed to render unlawful a subscription or contribution, or agreement to subscribe or contribute, made or entered into for or towards any plate, prize or sum of money, of the value or amount of five hundred rupees or upwards, to be awarded to the winner or winners of any horse race.
Relevant sections
Section 23: The word ‘object’ in Section 23 of the Contract Act was not used in the same sense as ‘consideration’, but was used as distinguished from consideration and means ‘purpose’ or ‘design’.The consideration or object of an agreement is lawful,
S.24. Agreements void, if considerations and objects unlawful in part. — Ifany part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.
Agreements without consideration [S. 25]
Section 25 declares that an agreement without consideration is void. This is, of course, subject to a few exceptions, which have already been considered along with “consideration”
S. 26. Agreement in restraint of marriage void
Every agreement in restraint of the marriage of any person, other than a minor, is void.
Sec 27. Agreement in restraint of trade void
Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
Sec. 28. Agreements in restraint of legal proceedings void
Sec. 29– Agreements whose meaning cannot be ascertained, and agreements, the meaning of which are incapable of being made certain, those agreements are void. If the meaning is capable of being made certain, it is not void.
Sec.30. Agreements by way of wager, void.—Agreements by way of wager are void;and no suit shall be brought for recovering anything alleged to be won on any wager,or entrusted to any person to abide by the result of any game or other uncertain event on which any wager is made.
Sec. 31. “Contingent contract” defined.—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.
Important case laws
Bhikanbhai v Hiralal, ILR (1900) 24 Bom 622
Held: the transfer is not a void agreement, it is valid because the government while saying he can’t sub-lease, the object wasn’t that any other person can’t operate it but that they wanted an efficient and easy collection of revenue. So, the transfer was not forbidden by the object of the agreement. If collection is still efficient, object is still sufficient. So, nature of transaction didn’t make term of license void.
Champsey v Gordhandas Kessowji. AIR 1917 Bom 250
Held: the admission of the partner to share the profits could not be considered as subletting, unless there had been a document which directly transferred to the partners, the right to manufacture or vend.
Case-UPSEB v Lakshmi Devi Sehgal, AIR 1977 All 499.
Held: under the electricity supply act, it is the duty of the board to transmit and provide electricity and transmitter is a very important part of it, so this agreement is in violation of the enactment.
Fateh Singh v Sanwal Singh, ILR (1875) 1 All 751
Held: the agreement was held to be void and the amount was not recoverable. The intention of the law being that the surety agrees at his own risk to see to the appearance of the accused, the contract for the indemnification of the surety in such a case would defeat the provisions of such a law.
Ragazzoni v K.C. Sethia (1956) 2 QB 490: (1956) 2 WLR 204
Held- While the English courts will not enforce foreign revenue or penal laws, they will not entertain an action based on a transaction which is knowingly intended to involve a breach of such laws..If two people knowingly agree together to breach the laws of a friendly country or to procure someone else to break them or to assist in the doing of it, then they cannot ask this court to give its aid to the enforcement of their agreement.
Howard v Shirlstar Container Transport Ltd (1990) 1 WLR 1292 (CA).
Held: Generally, if a person commits a crime, he can’t reap the fruits of that crime but in this case, there was necessity due to his perception that there was a threat to life in Nigeria. Hence, he is innocent and entitled to the fees. So, he was allowed to recover the money and not charged for the crime.
Points to remember
- Forbidden by law-“Law” in this connection means the law for the time being in force in India.
- Agreements void, if considerations and objects unlawful in part. — Ifany part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.
- Section 25 declares that an agreement without consideration is void. This is, of course, subject to a few exceptions, which have already been considered along with “consideration
- Every agreement in restraint of the marriage of any person, other than a minor, is void
- Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
- An agreement to settle the difference between the contract price and market price of certain goods on a specified day has been repeatedly held to be a wager. But, as transactions of this kind are always expressed in the . form of an agreement for the sale or purchase of goods, it often becomes difficult to ascertain the real object of the parties.
