Legality of Object and Consideration

MB-104:LESSON 6-
INDIAN CONTRACT
ACT, 1872:LEGALITY
OF OBJECT AND
CONSIDERATION
Prof. Sandip Mukherjee

LEGALITY OF OBJECT AND
CONSIDERATION
For a contract to be a valid contract two things are absolutely essential –
lawful object and lawful consideration. So the Indian Contract Act gives us
the parameters that make up such lawful consideration and objects of a
contract. Let us take a look at the legality of object and consideration of a
contract.
Lawful Consideration and Lawful Object:
Section 23 of the Indian Contract Act clearly states that the consideration
and/or object of a contract are considered lawful consideration and/or
object unless they are
> specifically forbidden by law
> of such a nature that they would defeat the purpose of the law
> are fraudulent
> involve injury to any other person or property
> the courts regard them as immoral
> are opposed to public policy
So lawful consideration and/or lawful object cannot contain any of the
above. Let us take a more in detail look at each of them.
FORBIDDEN BY LAW
When the object of a contract or the consideration of a contract

is prohibited by law, then they are not lawful consideration or
object anymore. They then become unlawful in nature. And so
such a contract cannot be valid anymore.
Unlawful consideration of object includes acts that are
specifically punishable by the law. This also includes those that
the appropriate authorities prohibit via rules and regulations. But
if the rules made by such authorities are not in tandem with the
law than these will not apply.
Let us see an example. A received a license from the Forest
Department to cut the grass of a certain area. The authorities at
the department told him he cannot pass on such interest to
another person. But the Forest Act has no such statute. So A sold
his interest to B and the contract was held as valid.
CONSIDERATION OR OBJECT DEFEATS
THE PROVISION OF THE LAW
This means if the contract is trying to defeat the intention
of the law. If the courts find that the real intention of the
parties to the agreement is to defeat the provisions of the
law, it will put aside the said contract. Say for example A
and B enter into an agreement, where A is the debtor,
that B will not plead limitation. This, however, is done to
defeat the intention of the Limitation Act, and so the
courts can rule the contract as void due to unlawful
object.
FRAUDULENT CONSIDERATION OR OBJECT
Lawful consideration or object can never be fraudulent.

Agreements entered into containing unlawful fraudulent
consideration or object are void by nature. Say for
example A decides to sell goods to B and smuggle them
outside the country. This is a fraudulent transaction as so
it is void. Now B cannot recover the money under the law
if A does not deliver on his promise.
DEFEATS ANY RULES IN EFFECT
If the consideration or the object is

against any rules in effect in the country
for the time being, then they will not be
lawful consideration or objects. And so
the contract thus formed will not be
valid.
WHEN THEY INVOLVE INJURY TO ANOTHER
PERSON OR PROPERTY
In legal terms, an injury means to a criminal and

harmful wrong done to another person. So if the
object or the consideration of the contract does
harm to another person or property, this will
amount to unlawful consideration. Say for
example a contract to publish a book that is a
violation of another person’s copyright would be
void. This is because the consideration here is
unlawful and injures another person’s property,
i.e. his copyright.
WHEN CONSIDERATION IS IMMORAL
If the object or the consideration are regarded by the

court as immoral, then such object and consideration
are immoral. Say for example A lent money to B to
obtain a divorce from her husband C. It was agreed once
B obtains the divorce A would marry her. But the court
passed the judgement that A cannot recover money
from B since the contract is void on account of unlawful
consideration.
WHEN CONSIDERATION IS OPPOSED TO PUBLIC
POLICY
For the good of the community, we

restrict certain contracts in the name
of public policy. But we do not use public
policy in a wide sense in this matter. If
that was the case it would curtail
individual freedom of people to enter into
contracts. So for the purpose of lawful
consideration and object public policy is
used in a limited scope. We only focus on
public policy under the law.
AGREEMENTS OPPOSED TO
PUBLIC POLICY
 Trading with the Enemy: Entering into an agreement with a person from a
country with whom India is at war, void be a void agreement. For
example, a trader entering into a contract with a Pakistani national
during the Kargil war.
 Stifling Prosecution: This is a pervasion of the natural course of law, and
such contracts are void. For example, A agrees to sell land to B if he does
not participate in the criminal proceedings against him.
 Maintainance and Champerty: Maintainance agreement is when a person
promises to maintain a suit in which he has no real interest. And
champerty is when a person agrees to assist another party in litigation for
a portion of the damages or proceeds.
 An Agreement to Traffic in Public Offices.
 Agreements to create Monopolies.
 An agreement to brokerage marriage for rewards.
 Interfering with the Courts: An agreement whose object is to induce
a judicial or state officials to act corruptly and interfere with legal
proceedings.

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MB-104:LESSON 6-

Prof. Sandip Mukherjee

When the object of a contract or the consideration of a contract

Lawful consideration or object can never be fraudulent.

If the consideration or the object is

In legal terms, an injury means to a criminal and

If the object or the consideration are regarded by the

For the good of the community, we

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