📜 The Indian Contract Act 1872: Sections 23 – 30
⚖️ Lawful considerations and objects — Section 23
Consideration or object of an agreement is lawful, unless it is forbidden by law or it would defeat provisions of any law or it is fraudulent or it involves injury to person or property of another it is immoral or it is opposed to public policy.
In each of these cases, consideration or object is unlawful.
Every agreement of which object or consideration is unlawful is void.
📝 Illustrations
- (e) A, B and C enter into agreement for division of gains acquired or to be acquired by fraud. Agreement is void as its object is unlawful.
- (f) A promises to obtain for B an employment in public service and B promises to pay 1,000 rupees to A. Agreement is void as consideration for it is unlawful.
- (h) A promises B to drop a prosecution which he has instituted against B for robbery. B promises to restore value of things taken. This agreement is void as its object is unlawful.
- (j) A, who is B’s mukhtar, promises to exercise his influence with B in favour of C. C promises to pay 1,000 rupees to A. This agreement is void because it is immoral.
- (k) A agrees to let her daughter to hire to B for concubinage. This agreement is void as it is immoral though the letting may not be punishable under IPC.
• in pari delicto: Latin for “in equal fault,” which means that two (or more) people are all at fault or are all guilty of a crime.
• In contract law, if the fault is more or less equal then neither party can claim breach of the contract by the other.
🚫 Part consideration unlawful — Section 24
If part of a single consideration for one or more objects or part of several considerations for a single object is unlawful, agreement is void.
📝 Illustration
A promises to superintend, on behalf of B a legal manufacture of indigo and an illegal traffic in other articles. B promises to pay to A salary of 10,000 rupees. This agreement is void as object of A’s promise and consideration for B’s promise is in part unlawful.
❌ Agreement without consideration — Section 25
An agreement without consideration is void unless:
- it is expressed in writing, it is registered under the relevant law and it is made on account of natural love and affection between parties standing in a near relation to each other
- Unless it is a promise to compensate a person who has already voluntarily done something for the promisor or something which the promisor was legally compellable to do
- Unless it is a promise, made in writing signed by the person to be charged therewith or by his agent to pay wholly or in part debt not enforceable because of law for limitation
In any of these cases such an agreement is a contract.
An agreement to which consent of promisor is freely given is not void merely because the consideration is inadequate but inadequacy of consideration may be taken into account by Court in determining whether consent of 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 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.
- (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. This agreement is a contract notwithstanding inadequacy of consideration.
- (g) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to agreement was freely given inadequacy of consideration is a fact which Court should take into account in considering whether or not A’s consent was freely given.
📘 Indian Contract Act 1872: Sections 26 to 30
Agreements in restraint of marriage, trade, legal proceedings, uncertainty, and wagers
💍 Agreement in restraint of marriage — Section 26
Every agreement in restraint of marriage of any person other than a minor is void
💼 Agreement in restraint of trade — Section 27
Every agreement by which anyone is restrained from exercising a lawful profession, trade or business is to that extent void.
Exception
Where goodwill is sold, one who sells goodwill of a business may agree with the buyer to refrain from carrying on a similar business within specified but reasonable local limits so long as buyer carries on a like business
⚖️ Agreement in restraint of legal proceedings — Section 28
Every agreement by which a party is restricted absolutely from enforcing his rights under any contract by usual legal proceedings in ordinary tribunals or which limits the time within which he may thus enforce his rights is void to that extent.
Exception
Contract which refers to arbitration
This section shall not render illegal any contract by which parties agree that any dispute which may arise shall be referred to arbitration and only an amount awarded in such arbitration shall be recoverable.
Exception 2
This section shall not render illegal any contract in writing by which parties agree to refer to arbitration a question which has already arisen
❓ Agreements void for uncertainty — Section 29
An agreement meaning of which is not certain or is not capable of being made certain is void
Illustrations
- (a) A agrees to sell B “a hundred tons of oil”. There is nothing to show what kind of oil was intended. Agreement is void for uncertainty.
- (c) A, a dealer in coconut-oil only, agrees to sell to B “one hundred tons of oil”. Nature of A’s trade affords a meaning of his words, and A has entered into contract for sale of 100 tons of coconut-oil.
- (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.
🎲 Agreements by way of wager — Section 30
Agreements by way of wager are void.
No suit shall be brought for recovering anything won on any wager.
What is a wager?
Literally the word ‘wager’ means a bet: something to be lost or won on the result of a doubtful issue. Wagering agreements are nothing but ordinary betting agreements.
Example:
A and B mutually agree that if it rains today A will pay B Rs 100, if it does not rain B will pay A Rs 100.
Exception: Prizes for horse-racing
This section shall not render unlawful a contribution or agreement to contribute made for any prize of 500 rupees or upwards to be rewarded to winner of any horse-race.
NOTE: 📝 Rationale for treating agreements by way of wager as void:
Law discourages people to enter into games of chance and make earning by trying their luck instead of spending their time and energy for more fruitful and useful work for themselves, their family and the society – Subhash Kumar Manwani v. State of MP [2000 MP]
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