Legality

of

Object

LEGALITY OF OBJECT

According to Section 23 of the Act, the object of an agreement is unlawful in the following cases:

1. If it is forbidden by law:

[Case: Srinivas v. Raja Ram Mohan]

A loan granted to the guardian of a minor to enable him to celebrate the minor’s

marriage

• It is in contravention of the Child Marriage Restraint Act and is illegal and cannot be recovered

2. If it is of such a nature that if permitted, it would defeat the provisions of any law

[Alexander v. Rayson]• A let a flat to B at a rent of £1200 a year. • With a view to reduce the municipal tax A

made two agreements with B. One, by which the rent was stated to be £450 only and the other, by which B agreed to pay £750 for services in connection with

the flat.• Held : A could not recover £750 since the

agreement was made to defraud the municipal authority and thus void

3. If it is fraudulent

Example: A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them by fraud. The agreement is void as its object is unlawful

4. If it involves or implies injury to the person or property of another

[Case: Ram Saroop v. Bansi]• A borrowed Rs. 100 from B. He (A)

executed a bond promising to work for B

without pay for 2 years and in case of default agreed to pay interest at a very

exorbitant rate and the principal amount at once.

• Held : The contract was void

5. If the Court Regards it as Immoral

[Baivijli v. Hamda Sagar]

M advanced money to R , a married woman to enable her to obtain a divorce from her husband. M agreed to marry her as soon as she could obtain a divorce.

Held: M could not recover advanced money because the object of agreement was immoral.

6. If it is opposed to public policy

(i) Trading with enemy

(ii) Agreements for stifling prosecution

(iii) Contracts in the nature champerty and maintenance

(iv) Agreements for the sale of public offices and titles

[Case: Saminathan v. Muthusami ]

A promises to pay a sum to B in order to induce him to retire so as to provide room for A’s appointment to the public office held by B

Held: The agreement is void

(v) Agreements in restraint of parental rights

[Giddu Narayanish v. Mrs. Annie Besant]• A father having two minor sons agreed to

transfer their guardianship in favour of

Mrs. Annie Besant and also agreed not to revoke the transfer.

• Subsequently, he filed a suit for recovery of the boys and a declaration that he was the rightful guardian,

Held: The Court held that he had the right to revoke his authority and get back the children.

(vi) Marriage brokerage

[Venkatakrishna v. Venkatachalam ]

A sum of money was agreed to be paid to the father in consideration of his giving his daughter in marriage.

Held : Such a promise amounted to a marriage brokerage contract and was void

(vii) Agreement in restraint of marriage

(viii) Agreements in restraint of legal proceedings

(ix) Agreements in restraint of trade

[Oakes & Co. v. Jackson ]

J, an employee of a company, agreed not to employ himself in a similar concern within a distance of 800 miles from Madras after leaving the company’s service.

Held : The agreement was void

Exceptions: [Cases in which restraint of trade is valid in India]

1. Sale of goodwill

[Goldsoll v. Goldmand]• S, a seller of imitation jewellery, sells his

business to B and promises not to carry on business in imitation jewellery and real jewellery.

Held : The restraint with regard to imitation jewellery was valid but not regarding real jewellery

2. Partners’ agreement:

3. Service agreements

(i) Any other engagement during his employment [ valid]

(ii) A similar engagement after the termination of his services [void]

• A agreed to become assistant for 3 years to B who was a doctor practising at Chennai.

• It was agreed that during the term of the agreement A was not to practise on his own account in Chennai.

• After one year, A started his own practice.

Held : The agreement was valid and A could be restrained by an injunction from doing so.

Example• A bank appoints an officer subject to the

condition that after ceasing to be in service he would not join the service of any other bank in India for a period of 5 years

Held: The bank shall not be in a position to enforce such condition.

(x) Agreement restricting personal liberty

(xi) Agreement tending to create interest opposed to duty

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