UNLAWFUL AND ILLEGAL AGREEMENTS

The object and the consideration of an agreement must be lawful, otherwise the agreement is
void. According the section 23, The Indian Contract Act 1872, the consideration or the object of
an agreement is unlawful in the following cases.

1. If it is forbidden by law.
2. If it defeats the provision of any law.
3. If it is fraudulent.
4. If it implies or involves injury to any person or property of another.
5. If court regards it as immoral or opposed to public policy.

According to section 24, if one of the several considerations or objects of an agreement is

unlawful, the agreement is a void agreement.

ILLEGAL AGREEMENTS:
Illegal agreements are those agreements which are:

1. void.
2. punishable by criminal law of the country or by any special legislation/regulation.

EFFECTS OF ILLEGAL AGREEMENTS:

1. The collateral transactions to an illegal agreement also becomes illegal and hence
cannot be enforced.
2. No action can be taken for the recovery of the money or property transferred under
an illegal agreement.
AGREEMENTS OPPOSED TO PUBLIC POLICY:
The agreements which cause harm to the public welfare are the agreements against the public
policy.

The following agreements have been held to be opposed to public policy:

1. Agreements of trading with enemy.

2. Agreements for stifling prosecution.
3. Agreements for sale/transfer of public offices and titles.
4. Agreements in restraint of personal liberty.
5. Agreements in restraint of marriage.
6. Agreements in restraint of trade.
7. Agreements in restraint of legal proceeding.
8. Agreements in restraint of parental rights.
9. Agreements tending to create monopoly.
10. Agreements in nature of maintenance and champerty.

Reference : Business law by p c Tulsian.

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