Note:
this post is a part of our important question answer series on Contract Law.
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Answer
Introduction
According
to Section 2(d) of the Indian Contract Act, 1872, consideration is defined as
follows:
“When at
the desire of the promisor, the promisee or any other person has done or
abstained from doing, or does or abstains from doing, or promises to do or
abstain from doing something, such act or abstinence is called a consideration
for the promisee.”
The concept of consideration is based on the legal maxim ‘Quid Pro Quo” which means something in return. Consideration for one is the promise for another and vice versa.
To read more about the meaning of Consideration, Click here.
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When consideration is deemed to be Unlawful
The consideration
or object of an agreement is lawful, unless:
1. Forbidden by Law:
Where the
object or the consideration of an agreement is prohibited by law, the agreement
is void. Such as: theft, murder, or for that matter any other offence/acts,
which are expressly or impliedly forbidden by any law for the time being
enforced, comes under this category.
For
example: Sale of liquor without a license is prohibited under the Excise Act
and is, therefore, illegal.
2. Defeat the purpose of Provisions of
any Law:
Though the
thing or consideration for the agreement, sometimes directly not forbidden by
law, they’re still forbidden if nature of such act defeats the intend of any
particular law. Agreement with such an object or consideration is void.
3. Fraudulent:
An agreement, the object of which is to defraud
others is void.
4. Injurious to Person or Property:
Any
agreement that suggests or involves injury to person or others property, it’s deemed
unlawful, and thus void.
For
example: The contract to republish a book that infringes another person’s
copyright will be void.
5. Immoral:
If the
object or consideration of an agreement is against morality, it’s void.
For example:
a landlord, let his house on rent to B, a billboard sex worker, knowing that it
might be used for immoral trafficking. the owner cannot recover the rent. Here,
the thing being immoral, the agreement to pay rent is void.
6. Agreements against Public Policy:
The term
public policy during a wider sense means restriction of freedom of persons from
doing something within the larger interest or for the great of the community.
within the context of the Indian Contract Act, it restricts the liberty of
persons to accept certain areas that are detrimental to public policy. They
are:
I.
Trading
with an alien enemy: Entering into a contract with the person of a country with
which India is at war, or expressly declared some country as it’s enemy, is a void agreement.
II.
Interference
with administration of justice,
III.
Marriage
brokerage agreements,
IV.
trafficking
publicly offices,
V. Agreement to create a monopoly.
Case: Gherulal
Parakh v. Mahadeodas: Forbidden by law” isn’t synonymous with the word ‘void’
and thus it is not essential that anything that is void is also “illegal by
law”.
Read other questions on Contract Law, Click here.
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