In Indian law, illegal agreements are those that involve considerations or objects forbidden by law, rendering them void and unenforceable. Such agreements can lead to legal consequences, including penalties and the nullification of any associated contracts.
MEANING AND DEFINITION
An illegal agreement is one whose consideration or object is unlawful. According to Section 23 of the Indian Contract Act, 1872, the consideration or object of an agreement is unlawful if it:
- Is forbidden by law;
- Is of such a nature that, if permitted, it would defeat the provisions of any law;
- Is fraudulent;
- Involves or implies injury to the person or property of another;
- Is immoral or opposed to public policy.
For instance, an agreement to commit a crime, such as theft or fraud, is illegal and void.
LEGAL PROVISIONS
Section 23 of the Indian Contract Act, 1872, outlines the parameters of lawful consideration and objects in agreements. It states that any agreement with an unlawful consideration or object is void. This section serves as a safeguard against contracts that could harm society or contravene legal statutes.
CONSEQUENCES OF ILLEGAL AGREEMENTS
Engaging in illegal agreements can lead to several legal consequences:
- Void Ab Initio: Such agreements are considered void from the outset, meaning they have no legal standing.
- Unenforceability: Parties cannot seek legal remedy for breach of an illegal agreement.
- Restitution: Courts generally do not assist parties in recovering money or property exchanged under an illegal agreement, adhering to the principle “in pari delicto potior est conditio defendentis” (in equal fault, the defendant’s position is stronger).
CASE LAWS
- Pearce v. Brooks (1866) LR 1 Ex 213: The court held that a contract for the hire of a carriage, knowing it would be used for prostitution, was void due to its immoral purpose.
- Gherulal Parakh v. Mahadeodas Maiya, AIR 1959 SC 781: The Supreme Court of India held that wagering agreements are void but not illegal unless declared otherwise by statute.
DOCTRINES AND PRINCIPLES
- Doctrine of Pari Delicto: This principle states that courts will not assist parties equally at fault in an illegal agreement.
- Doctrine of Severability: If a contract contains both legal and illegal parts, the legal portions may be enforced if they can be separated from the illegal ones.
MAXIMS
- Ex turpi causa non oritur actio: No action arises from a dishonorable cause.
- In pari delicto potior est conditio defendentis: In cases of equal fault, the defendant’s position is stronger.
CONCLUSION
Understanding the implications of illegal agreements is crucial for legal practitioners and individuals alike. Engaging in such agreements not only renders the contract void but also exposes the parties to potential legal consequences.