Legality of Object.ppt
- 1. Amity Business School Legality of Object Amity Global Business School, Bhubaneswar Amity Global Business School, Bhubaneswar
- 2. Amity Business School Legality of Object • A contract must not only be based upon mutual assent of competent parties but must also have a lawful object. • If the object of an agreement is the performance of an unlawful act, the agreement is unenforceable. • The words ‘object’ and ‘consideration’ are distinct in meaning. • The word object means purpose or design. • In some cases, consideration for an agreement may be lawful but the purpose is unlawful. In such cases the agreement is void.
- 3. Amity Business School When Consideration or Object is Unlawful (Sec. 23) • If it is forbidden by law • If it is of such a nature that, if permitted, it would defeat the provision of any law • If it is fraudulent – Example- A enters into a contract with B where he agrees to pay B if he embezzles money from C. This is considered a fraudulent object and the contract is not valid.
- 4. Amity Business School • If it involves or implies injury to the person or property of another – Examples: Publishing a book on the life of a person without his consent. Destruction of a property. Violation of licenses. Violation of copyrights. • If the court regards it as immoral – Example: A lends money to B on the condition that B will divorce C, and later get married to A. If B does not divorce C, then A cannot pursue legal proceedings against B to recover the money. The basic premise of this contract is immoral so it will be deemed void.
- 5. Amity Business School • Where the court regards it as opposed to public policy – Entering into an agreement with a party that belongs to a country with which India does not have peaceful relations, makes the agreement void. – Agreements to create monopolies.
- 6. Amity Business School Unlawful and Illegal Agreements • An unlawful agreement is one which, like a void agreement is not enforceable by law. It affects only the immediate parties and has no further consequences. • An illegal agreement, on the other hand, is not only void as between immediate parties but has this further effect that the collateral transactions to it also become tainted with illegality. • An agreement to commit a crime or trot • E.g., An agreement to assault A or an agreement to publish a libel is illegal.
- 7. Amity Business School • ‘Every illegal agreement is unlawful, but every unlawful agreement is not necessarily illegal’. • It is sometimes difficult to decide as to weather an act is illegal (or) unlawful because, as many of the illegal and the unlawful acts lie on the borderline. • It may, however, be observed that illegal acts are those which are opposed to public morals and unlawful acts are those which are less rigorous in effect and involves a ‘non-criminal breach of law’. • These acts do not effect public morals (nor) do they results in the commission of crime.
- 8. Amity Business School Effects of Illegality • No action is allowed on an illegal agreement. – The law discourages people from entering into illegal agreements. • The collateral transactions to an illegal agreement also become tainted with illegality • No action can be taken for the – Recovery of money paid or property transferred under an illegal agreement – Breach of an illegal agreement • L lends Rs 50000 to B to help him to purchase some prohibited goods from T, an alien enemy. If B enters into an agreement with T, the agreement will be illegal and the agreement between B and L shall also become illegal, being collateral to the main transaction which is illegal. L cannot recover the amount. Ha can recover the amount if he did not know of the purpose of the loan.
- 9. Amity Business School Agreements Opposed to Public Policy • Agreements of trading with enemy – If any contract is made with an alien enemy without the government’s permission, it is considered as illegal. – An alien enemy is a person who holds the citizenship of a country, having war with India. • Agreements which interfere with administration of justice – Interference with the course of justice • An agreement which obstructs the ordinary process of justice is unlawful. An agreement for using improper influence of any kind with the judges or officers of justice is unlawful.
- 10. Amity Business School – Stifling prosecution • It refers to making money out of crime and it is considered as abuse of law. As per law, a person should be punished for committing an offence, if the charges against him are proved by court of law. An agreement for suppressing criminal charges is illegal and void. – Maintenance and champerty • Champerty is a type of bargaining in which a third party offers assistance in recovering property, and in return demands a share of the recovered property. • Maintenance implies helping a third party in litigation or through financial help, and no benefits are attached. • Both Champerty and Maintenance are illegal in the English law but in India, it depends on the facts of the case.
- 11. Amity Business School • Agreement to commit a crime – A promises to indemnify B in consideration of his beating C. the agreement is opposed to public policy. • Agreements in restraint of legal proceedings – Agreements restricting enforcement of rights • An agreement which wholly or partially prohibits any party from enforcing his rights under or in respect of any contract is void to that extent. – Agreements curtailing period of limitation • Agreements which curtail the period of limitation prescribed by the Law of Limitation are void because their object is to defeat the provisions of law.
- 12. Amity Business School • Trafficking in public offices and titles – Agreements for sale or transfer of public offices and titles or for the procurement of a public recognition like Padma Vibhushan or Param Veer Chakra for monetary consideration are unlawful, being opposed to public policy. – An agreement to pay money to a public servant to induce him to act corruptly or to retire and make way for the appointment of the promisor or an agreement with voters to procure their votes for monetary consideration are void on the ground of public policy.
- 13. Amity Business School • Agreements tending to create interest opposed to duty – P directs A, his agent to buy a certain house for him. A tells P that it cannot be bought and buys the house for himself. • Agreements in restraint of parental rights – A father and in his absence the mother is the legal guardian of his/her minor child. – This right of guardianship cannot be bartered away by any agreement. – A father is entitled by law to the custody of his legitimate child.
- 14. Amity Business School • Agreements restricting personal liberty – Agreements which unduly restrict the personal freedom of the parties to it are void as being against public policy. • Agreements in restraint of marriage – Every agreement in restraint of marriage of any person, other than a minor, is void. – P promised to marry L only and none else and to pay L a sum of Rs 200000 if he married someone else. P married X. held, L could not recover the sum agreed as the agreement was in restraint of marriage.
- 15. Amity Business School Cases 1. A borrows Rs 5000 from B to purchase certain smuggled goods from C. Can B recover the amount from A if he (a) knows A’s purpose for which he borrows money (b) does not know A’s purpose? 2. X promises to drop prosecution which has instituted against R for robbery and R promises to restore the value of things taken. Can X reinforce this promise? If so give reasons.
- 16. Amity Business School 3. A promise to pay Rs 5000 B who is an intended witness in a suit against A in consideration of B’s absconding himself at the trial. B absconds but fails to get the money. Can he recover? 4. A’s wife B paid Rs 5000 to C to be given as a bribe to a jailor for procuring release for her husband from jail. The jailor failed to procure the release. Can B recover the amount?
- 17. Amity Business School Answer • 1. a. No b. Yes 2. No 3. No, as the agreement is unlawful, being opposed to public policy. 4. No, as the agreement is unlawful, being opposed to public policy.
Editor's Notes
- #4: Embezzlement: theft or misapprpriation of funds placed in one’s trust or belonging to one’s employer.
- #7: Libel: a published false statement that is damaging to a person’s reputation.
- #11: Champerty: is an agreement whereby one party is to assist another to bring an action for recovering money or property, and is to share in the proceeds of the action.
- #12: 'Law of Limitation' prescribes the time-limit for different suits within, which an aggrieved person can approach the court for redress or justice