23. WHAT CONSIDERATION AND OBJECTS ARE LAWFUL, AND WHAT NOT. —
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; oris 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.
In each of these cases, the consideration or object of an agreement is said to be unlawful.
Every agreement of which the object or consideration is unlawful is VOID.
ILLUSTRATIONS
a. A agrees to sell his house to B for 10,000 rupees. Here, B's promise to pay the sum of 10,000 rupees is the consideration for A's promise to sell the house and A's promise to sell the house is the consideration for B's promiseto pay the 10,000 rupees. These are lawful considerations.
b. A promises to pay B 1,000 rupees at the end of six months, if C, who owes that sum to B, fails to pay it. B promisesto grant time to C accordingly. Here, the promise of each party is the consideration for the promise of the other party, and they are lawful considerations.
c. A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here, A's promise is the consideration for B's payment, and B's payment is the consideration for A's promise,and these are lawful considerations.
d. A promises to maintain B's child, and B promises to pay A 1,000 rupees yearly for the purpose. Here, the promiseof each party is the consideration for the promise of the other party. They are lawful considerations.
e. A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them byfraud. The agreement is void, as its object is unlawful.
f. A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. Theagreement is void, as the consideration for it is unlawful.
g. A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for B alease of land belonging to his principal. The agreement between A and B is void, as it implies a fraud by concealment, by A, on his principal.
h. A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore thevalue of the things taken. The agreement is void, as its object is unlawful.
i. A's estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing the estate. 'B, upon an understanding with A, becomes the purchaser, and agrees to convey the estate to A upon receiving from him the price which B has paid. The agreement is void, as it renders thetransaction, in effect, a purchase by the defaulter and would so defeat the object of the law.
j. A, who is B's mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A. The agreement is void, because it is immoral.
k. A agrees to let her daughter to hire to B for concubinage. The agreement is void, because it is immoral, though the letting may not be punishable under the Indian Penal Code (45 of 1860).
VOID AGREEMENTS
24. AGREEMENTS 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.
ILLUSTRATION
A promises to superintend, on behalf of B, a legal manufacturer of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year. The agreement is void, the object of A's promise, and the consideration for B's promise, being in part unlawful.
25. AGREEMENT WITHOUT CONSIDERATION, VOID, UNLESS IT IS IN WRITING AND REGISTERED OR IS A PROMISE TO COMPENSATE FOR SOMETHING DONE OR IS A PROMISE TO PAY A DEBT BARRED BY LIMITATION LAW.—
An agreement made without consideration is void, unless—
1. it is expressed in WRITING AND REGISTERED under the law for the time being in force for the registration of documents, and is made on account of NATURAL LOVE AND AFFECTION between parties STANDING IN A NEAR RELATION TO EACH OTHER; or unless
2. it is A PROMISE TO COMPENSATE, wholly or in part, a person who HAS ALREADY VOLUNTARILY DONE something for the promisor, or something which the promisor was legally compellable to do; or unless.
3. It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.In any of these cases, such an agreement is a contract.
Explanation 1.—
Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.
Explanation 2.—
An Agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.
ILLUSTRATIONS
a) A promises, for no consideration, to give to B Rs. 1,000. This is a void agreement.
b) A, for natural love and affection, promises to give his son, B, Rs. 1,000. A puts his promise to B into writing and registers it. This is a contract.
c) A finds B's purse and gives it to him. B promises to give A Rs. 50. This is a contract.
d) A supports B's infant son. B promises to pay A's expenses in so doing. This is a contract.
e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract.
f) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A's consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration.
g) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to the agreement was freely given.
The inadequacy of the consideration is a fact which the Court should take into account in considering whether or notA's consent was freely given.
26. AGREEMENT IN RESTRAINT OF MARRIAGE , VOID. —
Every agreement in restraint of the marriage of any person, other than a minor, is void.
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.
EXCEPTION 1.—
Saving of AGREEMENT NOT TO CARRY ON BUSINESS OF WHICH GOODWILL IS SOLD.—
One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein,provided that such limits appear to the Court reasonable, regard being had to the nature of the business.
28. AGREEMENTS IN RESTRAINT OF LEGAL PROCEEDINGS, VOID.—
Every agreement,—
(a) 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
(b) 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.
EXCEPTION 1.—
Saving of contract to refer to arbitration dispute that may arise.—This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.
EXCEPTION 2.—
Saving of contract to refer questions that have already arisen.—Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration.
29. AGREEMENTS VOID FOR UNCERTAINTY.—
Agreements, the meaning of which is not certain, or capable of being made certain, are void.
ILLUSTRATIONS
a) A agrees to sell B "a hundred tons of oil". There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainty.
b) A agrees to sell B one hundred tons of oil of a specified description, known as an article of commerce. There is nouncertainty here to make the agreement void.
c) A, who is a dealer in coconut-oil only, agrees to sell to B "one hundred tons of oil". The nature of A's trade affords an indication of the meaning of the words, and A has entered into a contract for the sale of one hundred tons of coconut-oil.
d) A agrees to sell B "all the grain in my granary at Ramnagar". There is no uncertainty here to make the agreement void.
e) A agrees to sell to B "one thousand maunds of rice at a price to be fixed by C". As the price is capable of being made certain, there is no uncertainty here to make the agreement void.
f) A agrees to sell to B "my white horse for rupees five hundred or rupees One thousand". There is nothing to show which of the two prices was to be given. The agreement is void.
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 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 toward any plate, prize or sum of money, of the value or amount of FIVE HUNDRED RUPEES OR UPWARDS, TO BE rewarded to the winner or winners of any horse- race.
SECTION 294A OF THE INDIAN PENAL CODE NOT AFFECTED.—
Nothing in this section shall be deemed to legalize any transaction connected with horse-racing, to which the provisions of section 294A of the Indian Penal Code (45 of 1860) apply.
WAGERING CONTRACT
A chit-fund does not come within the scope of wager; Narayana Ayyangar v. K.V. Ambalam, (1927) ILR 50 Mad 696 (FB).
