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Business Environment and Law-Law Of Contract (Indian Contract Act 1872)

Unlawful Agreements-Law Of Contract

   Posted On :  07.05.2018 12:40 am

According to the Indian Contract Act, “The consideration or object of an agreement is lawful, unless it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the court regards it as immoral, or opposed to public policy.

Unlawful Agreements
 
According to the Indian Contract Act (Sec. 23), “The consideration or object of an agreement is lawful, unless it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the court regards it as immoral, or opposed to public policy.

 
 Let us see the provisions of Sec. 23 which make an agreement unlawful.

1. Forbidden by law: If the object of the agreement or the consideration of the agreement is the doing of an act which is forbidden by law, the agreement is void.
 
2. If it is of such a nature that, if permitted, it would defeat the provisions of any law: i.e. it would indirectly lead to a violation of the law.
 
3. If it is fraudulent: Any agreement whose object is to defraud others is void.
 
4. If it involves or implies injury to the person or property of another:

5. If the Court regards it as immoral.
 
6. f the Court regards it as opposed to public policy: The following agreements have been held to be against public policy:
 
a. Trading with Enemy:
 
b. Agreements for stifling prosecution: An agreement to suppress criminal charge is void because if a person has committed a crime, public policy requires that he should be prosecuted.
 
c. Agreements interfering with the Course of Justice: An agreement entered into with the object of exercising improper influence on judges or officers of justice is bad in law as opposed to public policy.
 
d. Agreements tending to an abuse of legal process: There may be two types of agreements under this head, one is Maintenance and the other is Champerty.
 
e. Agreement to vary the period of limitation: An agreement that reduces or increases the period of limitation as laid down by the law of limitation is opposed to public policy.
 
f.  Traffic in Public Offices: An agreement whereby an appointment to a public office is procured for monetary consideration is against public policy because it would cause corruption in administration of the State.
 
g. Agreement creating an interest opposed to duty
 
h. Agreements restraining personal freedom
 
i. Agreements opposed to parental rights and duties: Father is supposed to be the guardian of his children and in the absence of the father their mother acquires this right as well as responsibility and this right cannot be bartered away.
 
j.  Marriage Brokerage Agreements: Agreement to pay reward to a person for negotiating marriage is opposed to public policy.
 
The following agreements are also opposed to public policy.
 i.  Agreements in restraint of marriage.
 ii. Agreements in restraint of trade.
 iii. Agreements in restraint of legal proceedings.

 

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