Legality of Object and Consideration

(g) Legality of Object and Consideration

Section 23 governs what makes the object or consideration of an agreement lawful. It states

that the consideration or object of an agreement is unlawful if:

1. it is forbidden by law;
2. it is of such a nature that, if permitted, it would defeat the provisions of any law;
3. it is fraudulent;
4. it involves or implies injury to the person or property of another;
5. the court regards it as immoral; or
6. the court regards it as opposed to public policy.

If any of these apply, the consideration or object is unlawful, and — crucially — "in each of these cases, the consideration or object of an agreement is said to be unlawful," and every agreement of which the object or consideration is unlawful is void.

Agreements against public policy — a body of agreements courts refuse to enforce even though

no specific statute names them, because enforcing them would be harmful to society generally.

The standard examples covered under this unit, several of which the Act also expressly

addresses in Sections 26–30:

• Agreements in restraint of marriage — Section 26: any agreement (other than one restraining the marriage of a minor) that restrains a person's marriage is void.
• Agreements in restraint of trade — Section 27: an agreement restraining anyone from exercising a lawful profession, trade, or business is void, WITH narrow, specifically recognised exceptions — e.g. a reasonable restraint on the seller of a business's goodwill from carrying on a competing business within specified local limits, and reasonable restraints agreed between partners of a firm (governed by the Indian Partnership Act, 1932).
• Agreements in restraint of legal proceedings — Section 28: an agreement that absolutely restricts a party from enforcing their legal rights through the ordinary courts, or that limits the time within which they may do so, is void.
• Agreements the meaning of which is uncertain — Section 29: an agreement whose terms are not certain, or capable of being made certain, is void for uncertainty.
• Wagering agreements — Section 30: an agreement by way of wager (a bet on an uncertain future event, where the sole object is to win or lose money based on that event) is void, though — importantly — a wagering agreement is void, not illegal (its collateral transactions remain enforceable, unlike a truly illegal agreement); a narrow, separately regulated exception exists for certain horse-race wagers.
• Other recognised heads of public-policy invalidity taught alongside these: agreements to trade with an enemy nation during war, agreements to commit a crime, marriage-brokerage agreements, and agreements creating an interest in conflict with a person's public or professional duty.

Void agreements — Sections 24–30, gathered together: agreements without consideration

(Section 25, subject to its own three exceptions — see sub-topic (c)); agreements in restraint

of marriage (Section 26); agreements in restraint of trade (Section 27); agreements in restraint

of legal proceedings (Section 28); agreements uncertain in meaning (Section 29); and wagering

agreements (Section 30). …