Section 23 of the Indian Contract Act, 1872, delineates the parameters that render an object or consideration lawful. Understanding these provisions is crucial for law students to grasp the foundational principles governing enforceable contracts in India.
MEANING AND DEFINITION
The term “lawful object” refers to the purpose for which a contract is entered into, while “consideration” denotes the benefit or detriment exchanged between the parties. For a contract to be valid, both the object and the consideration must be lawful. Section 23 of the Indian Contract Act, 1872, states:
“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; or is 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.” (India Code)
ESSENTIALS OF LAWFUL OBJECT AND CONSIDERATION
An agreement’s object and consideration are deemed lawful unless they:
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ARE FORBIDDEN BY LAW: If the law explicitly prohibits the act constituting the object or consideration, the agreement is void. For instance, an agreement to sell narcotics is unlawful as it is prohibited by the Narcotic Drugs and Psychotropic Substances Act, 1985.
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DEFEAT THE PROVISIONS OF ANY LAW: Agreements that, if executed, would nullify the intent of existing laws are void. For example, an agreement to evade tax liabilities defeats the purpose of tax laws.
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ARE FRAUDULENT: Contracts based on deceit or intended to defraud others are void. For example, in the case of Gherulal Parakh v. Mahadeodas Maiya, the Supreme Court held that an agreement entered into with the intent to defraud creditors was void.
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INVOLVE INJURY TO PERSON OR PROPERTY: Agreements that cause harm to individuals or their property are unlawful. For instance, a contract to commit assault is void.
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ARE IMMORAL: Contracts that contravene societal morals are void. In Pearce v. Brooks, an agreement to supply a carriage to a prostitute, knowing it would be used for immoral purposes, was held void.
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ARE OPPOSED TO PUBLIC POLICY: Agreements that harm public welfare or are against the public good are void. For example, agreements restraining legal proceedings or promoting corruption fall under this category.
CASE LAWS ILLUSTRATING UNLAWFUL OBJECT AND CONSIDERATION
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Srinivasulu v. Arundhati (AIR 1997 AP 319): In this case, an agreement to pay money to a person to influence a public servant was held void as it was opposed to public policy.
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Rajaram v. Ram Bilas (AIR 1984 All 126): An agreement to withdraw a criminal case in exchange for money was deemed void, as it involved an unlawful object.
LEGAL PROVISIONS AND DOCTRINES
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DOCTRINE OF PARI DELICTO: This doctrine states that when both parties are equally at fault in an illegal agreement, the court will not assist either party. In Sita Ram v. Radha Bai (AIR 1968 SC 534), the Supreme Court held that the courts will not assist a party who grounds their action upon an immoral or illegal act.
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DOCTRINE OF SEVERABILITY: If a contract contains both legal and illegal parts, the legal portion can be enforced if it is separable from the illegal part. In Gherulal Parakh v. Mahadeodas Maiya (AIR 1959 SC 781), the court applied this doctrine to enforce the lawful part of an agreement.
MAXIMS RELATED TO LAWFUL OBJECT AND CONSIDERATION
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Ex turpi causa non oritur actio: No action arises from an immoral cause. This maxim implies that a contract based on an immoral or illegal act cannot be enforced.
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In pari delicto potior est conditio defendentis: In equal fault, the defendant’s position is stronger. This means that when both parties are at fault, the defendant is in a better position.
CONCLUSION
Understanding the concepts of lawful object and consideration is fundamental in contract law. Agreements must align with legal provisions, moral standards, and public policy to be enforceable. Law students should familiarize themselves with relevant case laws, doctrines, and legal maxims to navigate this area effectively.
REFERENCES
- Gherulal Parakh v. Mahadeodas Maiya, AIR 1959 SC 781.
- Sita Ram v. Radha Bai, AIR 1968 SC 534.
- Pearce v. Brooks (1866) LR 1 Ex 213.
- Srinivasulu v. Arundhati, AIR 1997 AP 319.
- Rajaram v. Ram Bilas, AIR 1984 All 126.
