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All about lawful consideration

This article has been written by Vidushi Kachroo. This article aims to provide the necessary information about the consideration of a contract. It elaborates on the meaning of the term consideration given under the legal provisions and its essential ingredients. The article also focuses on unlawful consideration and its effects on the contract. Moreover, the article also includes various case laws and illustrations, as well as an explanation of some concepts in brief related to consideration.

Introduction

It is often seen that whenever we agree to do an act or restrain ourselves from doing an act, we do not do it for free. There is always some sort of value or benefit attached to it for which we give our consent. The act that we do in return for the benefit is what we call ‘consideration’ within the context of a contract. It is governed by the provisions of the Indian Contract Act, 1872. The term contract is defined under Section 2(h) of the Act as ‘an agreement enforceable by law is a contract’.

But the question arises what exactly is an agreement? As per Section 2(e) of the Act, ‘every promise and every set of promises, forming consideration for each other, is an agreement’

Hence, a contract is an agreement made for some consideration that is enforceable by law. As we go through this definition, we come across the most essential element of a valid and legal contract, i.e., consideration. An agreement made without consideration is not a contract, and this has been stated under Section 25 of the Act with some exceptions. Therefore, the presence of consideration in an agreement is crucial to determining its enforceability as a contract. 

Let’s discuss the concept of consideration in detail below. 

What is consideration

The concept of consideration is based on the principle of quid pro quo, a Latin term meaning ‘to take something in return’. Basically, consideration is something of a certain value in return for which a party to the contract agrees to do or abstain (restrain oneself) from doing something. For easy understanding, consideration can also be referred to as the price of the contract. 

Consideration may be anything that has some value in the eyes of the law. It can be a right, interest, money, asset, etc. But it is important to note that qualitative aspects or feelings like love, respect, etc., do not come under the ambit of a valid consideration in law. Also, it is not important that a consideration must always have a monetary value attached to it; rather, it just has to be something that has an actual value in any form in the eyes of the law. This was established in the case of Chappell and Co. Ltd. v. Nestle Co. Ltd. (1960). In this case, Nestle Co. Ltd. had started an advertisement stating that for every 3 wrappers of their 6 penny chocolate bars, they would be selling the music records at a discounted price. This was challenged by the Appellant on the ground that the consideration given by the Respondent was not adequate. The Court, in this case, held its decision in favour of the Respondent by stating that the presence of consideration is important for the agreement to be valid, and the adequacy of the consideration need not be important; however, it must be of some value in the eyes of law. Although the wrappers may seem useless in general, they do possess certain value.

Section 2(d) of the Act gives the definition of consideration as:

‘When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise’. 

Now, if we try to break this definition into parts, it becomes easier for us to understand it. So the essentials to be remembered here are:

  • There must be two parties present in every contract, i.e., a promisor and a promisee.
  • The desire or wish of the promisor.
  • An act or abstinence by the promisee or any other person. 

In this regard, the meaning of the word abstinence means to restrain someone or oneself from doing a specific act or thing. Now that we have a basic understanding of the term consideration, let us move on to the essential elements for making the consideration valid and enforceable.

Essentials for a valid consideration 

There are some essential elements that must be present in the consideration so as to make it valid and legally enforceable. It is very important to have a valid consideration because if there is no valid consideration, the contract is void. This means that a valid consideration makes a contract valid and enforceable before the law. It is necessary so as to give protection to the rights and interests of both parties to the contract. Since a contract without a valid consideration is not enforceable in court, the rights and interests of any of the parties to the contract do not have any legal protection.

The essentials for a valid consideration are as follows:

An act or abstinence 

For a consideration to be valid, there must be an act or an abstinence. Here, an act is something to which the promisee is not bound or obligated by law to do; rather, he does it at the desire of the promisor. On the other hand, abstinence or to abstain means to refrain from doing something to which the promisee is legally entitled, but he agrees to refrain from doing it at the desire of the promisor. Such an act or abstinence can be in the past, present, or even in the future. All these terms are included in the definition of consideration itself. The words ‘has done or abstained from doing’, ‘does or abstains from doing’, and ‘promises to do or abstain from doing’ indicate the past, present, and future forms of consideration, respectively. Hence, for a valid consideration, there must be an act of abstinence, and it must be legal. 

Past, present or future consideration

Our legislature is very clear about the time frame of a valid consideration. It approves all three forms of consideration, i.e., past, present, and future considerations. A consideration is valid irrespective of the fact that it was, is to be, or will be furnished. 

The English law does not recognise the concept of past consideration. It only accepts present and future considerations as valid and enforceable. But Indian law has acknowledged this concept and included it in the very definition of consideration to avoid any loopholes. Hence, the consideration may be in past, present, or future form. 

Past consideration is an act or abstinence that has already been done. For example, X, while repairing his car on the road, gets injured badly, and Z, a passerby, rushes in to help X and takes him to the medical clinic for treatment. After the treatment, X promises to pay Z an amount of ₹ 3000. The act done by Z in the past is a valid consideration.

Present consideration is something that is fulfilled simultaneously as the promise is made. This type of consideration is also called an executed consideration. For example., A sells his mobile phone to B and receives the payment at that moment only. This is known as present consideration.

Future consideration, as its name suggests, is something that is promised to be fulfilled in the future. It is also called an executory consideration as it is yet to be performed. For example, X promises to deliver 10 bags of cement to Z next week, and Z promises to pay the amount of the cement bags when they are delivered.  This is called future consideration. 

The concept of future consideration can be understood from the case of Kedarnath v. Gorie Mahomed (1887). The Respondent had made a promise to the Appellant that he would pay the amount incurred in the construction of the town hall in Howrah. On the basis of this promise, the Appellant started the work and completed the construction. When he asked for the payment as promised by the Respondent, the latter refused to pay the amount. This was initially challenged in the Howrah Court of Small Causes, and the decision was given in favour of the Respondent, but when this case went before the Madras High Court, the Hon’ble Court held the decision in favour of the Appellant on the ground that when a promise is made, the promisor cannot revoke it once the promise has begun. Hence, the Madras High Court held that the promise was enforceable as the work was done at the desire of the promisor, in anticipation of receiving the payment after the completion of the work and that the promisor was liable to pay the amount as he had promised. 

Consideration by promisee or any other person

Examining the definition under Section 2(d) more closely reveals the inclusion of the words ‘the promisee or any other person’. This implies that consideration for the contract can be fulfilled not only by the promisee but also by any other person. This is sometimes called the doctrine of constructive consideration. The implication of this doctrine is very simple, that it is not essential for the consideration to be fulfilled by the promisee alone. The consideration may be fulfilled by any other person who is a stranger to that consideration. However, this doctrine is not followed in English law. English law follows the doctrine of privity of contract.

Privity of contract

This doctrine lays down that only the parties to the contract have the right to sue and be sued in order to enforce the terms of that contract. It ensures that a contract remains a private agreement between the parties, and no third person can take advantage of such a contract in which he has not entered. This was established in the landmark case of Tweddle v. Atkinson (1861). In this case, it was held that no person who is a stranger to the consideration could take advantage of a contract, even if the contract were made for his benefit. On the basis of this general rule, it was held that the Plaintiff had no right to sue under the contract.

However, the perspective of Indian law is different from that of English law here. The Indian law stresses on the presence of consideration for a contract to be enforceable, and not on the fact of who furnished it. This was held in the case of Chinnaya v. Ramayya (1882). In this case, a lady gifted some property to her daughter through a registered gift deed with the condition that the daughter, in return, has to pay an amount of ₹653 to her sister annually. The daughter agreed to the condition of paying the said amount every year to her mother’s sister (the Plaintiff). However, after the death of her mother, the daughter (the Defendant) refused to pay the amount to the Plaintiff, to whom she had made a promise to pay the said amount. The Plaintiff sued the Defendant in order to recover the promised amount. The Madras High Court held that the Defendant is liable to pay the amount to the Plaintiff because, though the Defendant was not a party to the contract, the agreement was furnished by the Defendant’s mother on behalf of the Plaintiff, and it was given under Section 2(d) of the Act that the consideration may be furnished by the promisee or any other person. 

Stranger to consideration vs. stranger to contract

As we discussed the concept of stranger to consideration above, it is essential to note that this concept is different from the concept of stranger to contract. A stranger to a contract is a person who is not a party to the contract and cannot initiate a lawsuit for it. However according to Indian law, a person has the right to initiate a lawsuit if the consideration is furnished on behalf of him or for his benefit by the promisee, even if he is a stranger to the contract. 

We can understand this by the definition of consideration under Section 2(d), as the words ‘promisee or any other person’ indicate that a promise gets initiated only at the desire of the promisor, but however, it can be fulfilled by either the promisee himself or by any other person who is a stranger to consideration. It is important to note that under certain circumstances, a stranger to a contract is also entitled to initiate a lawsuit, such as in cases of marriage settlement, family settlement, assignment of contract, etc. 

In the case of Premalatha v. Mysore Minerals Ltd. (1992), the Karnataka High Court held that the Petitioner had the right to seek relief from the insurance corporation on behalf of her deceased husband on the ground that even though the contract was between the company, where her deceased husband was an employee, and the insurance corporation, the benefit of the contract was for the employees of the company itself. Hence, the employees and their heirs had the right to claim that benefit.

Consideration at the desire of promisor 

Another key ingredient of a valid consideration that we can draw from the definition of consideration given under Section 2(d) of the Act is that it must be fulfilled only at the desire of the promisor. If the act or abstinence is done at the will of any other party, the consideration will be considered void. This is because it is specifically mentioned in Section 2(d) through the words ‘at the desire of the promisor’ that the promisee, or any other person for that matter, must furnish the consideration at the desire of the promisor. However, the benefit of the consideration may be enjoyed by a third person if the promisor consents to it. 

In the case of Durga Prasad v. Baldeo and Ors. (1881), the Plaintiff was approached by the District Authority of Etawah for the construction market in the local area. The Plaintiff accepted the proposal and constructed a two-grain market. He also built buildings for shops and bought land for them. The Defendants leased the shops and worked as commission specialists. It was decided that the Defendants would pay a commission of a certain sum to the Plaintiff regularly, and the Plaintiff approached the municipal corporation to make the agreement legally binding by having it registered. However, the Defendants refused to give their consent to register their agreement, and hence, the Plaintiff initiated legal proceedings against the Defendants in order to safeguard his right to a regular commission. The Allahabad High Court held its decision in favour of the Defendants on the ground that it is the basic essential element of consideration given under Section 2(d) of the Indian Contract Act, 1872, that the consideration must be moved by the promisee or any person at the desire of the promisor. The Court held that the market was constructed at the desire of the District Authority of Etawah and not at the desire of the Defendants. Hence, there was no established relationship between the Plaintiff and the Defendants as the promisor and promisee. 

Consideration must be legal

A consideration must be legal, i.e., it must not be something that is illegal or void in the eyes of the law. If a consideration is not legal, it will automatically have no value or enforceability in a court of law. The meaning of a valid or lawful consideration is discussed further in the article.

What is lawful consideration

A lawful consideration is one that is enforceable in a court of law. Section 10 of the Act clearly states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration, and with a lawful object, and are not hereby expressly declared to be void’.

As per this Section, it is understandable that every agreement is a contract if:

  • It is made with the free consent of all parties.
  • The parties are competent to enter into an agreement as prescribed by the law.
  • It is made for lawful consideration and with a lawful object.
  • Is not expressly declared void. 

As per Section 23 and Section 24 of the Act, any agreement with an unlawful consideration shall be void. The Act does not directly state the essentials of a lawful consideration. Instead, Section 23 provides the factors that make a consideration unlawful. So, a consideration is said to be lawful if it does not have any of the elements given under Section 23, which makes it unlawful.

In the case of Ram Sarup Bhagat v. Bansi Mandar (1915), the Defendant sought a loan of ₹13 lakhs from the Plaintiff and promised to return the principal amount with the interest accrued in the month of Baisakh in the coming year. However, it was decided that until the amount was repaid, Defendant would work in the fields of Plaintiff, which included the work of planting seeds, ploughing the field, threshing crops, etc. It was also decided that if the Defendant remained absent even for a single day, he would have to pay the entire principal sum along with an increased 4% to 6% interest rate on that same day. Defendant worked for Plaintiff for two years continuously, and one day, after being absent from work, he was asked to pay the sum as decided. The Defendant refused to pay his liability in return, for which the Plaintiff filed a case against him for breach of contract. The court held that the agreement was not enforceable and was void. It was in contradiction with Section 23 of the Act, as the Defendant was made to work without any pay for two years in return for the loan sought by him. Hence, the Court held that there was no difference between his work and slavery. Also, the Plaintiff expected the repayment of the entire loan with huge additional interest, which the Defendant could not bear as he was poor. The Calcutta High Court held that the contract was opposed to public policy and hence, not enforceable.                 

However, in the case of Gherulal Parakh v. Mahadeodas Maiya and Ors. (1959), the partnership agreement was entered into and focused on engaging in wagering transactions. The Supreme Court held that the partnership was not void as per Section 23 of the Indian Contract Act, 1872, despite the wagering contract being void under Section 30 of the Act. The Court held that the partnership agreement was not against public policy, emphasising that public policy was a branch of common law led by precedents and that the scope of the word ‘immoral’ should be restricted to recognised court principles.

When is a consideration unlawful

Section 23 of the Act states what considerations or objects are considered unlawful in the eyes of the law. As per this section:

The consideration or object of an agreement is lawful unless-

  • It is forbidden by law;
  • Is of such nature that, if permitted, it would defeat the provisions of any law; or is fraudulent;
  • Involves or implies injury to the person or property of another;
  • The court regards it as immoral or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. Let us understand the aforementioned points in detail. 

Forbidden by law

If a consideration refers to the performance of an act that is forbidden by law, such consideration shall be said to be void in the eyes of the law. An act is said to be forbidden by law when any law restricts a person from doing a certain act and imposes a punishment or fine on every such person who performs any such forbidden act. It is important to note that all agreements with illegal consideration are void, but all void agreements may not always be illegal.  

Defeats the provision of law

A consideration is also said to be unlawful if it defeats the provisions of the law. This means that if the consideration is any act that, although not prohibited by the law directly, it seems that the performance of such an act would defeat or contradict the objectives of the law, it is not possible to avoid such contradiction, such a consideration shall be void. Hence, an agreement made with the intention of defying the objective of any provision of any law shall be void. 

In the case of Ram Sewak v. Ram Charan (1982), both the parties had agreed to carry on their business in partnership, which was lawful. However, the parties decided to conceal some parts of their business activities and not show some transactions in the books of accounts in order to evade payment of income tax. The Allahabad High Court held that the agreement was not enforceable as it aimed at defeating the provisions of tax laws. 

Fraudulent purposes

Section 23 provides that any consideration made purposefully for fraudulent purposes shall be void. Hence, any agreement made in order to defraud any person shall be void in the eyes of the law. This is explained very effectively in illustration (g) of Section 23 and it says: ‘A, being an agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for B a lease of land belonging to his principal. The agreement between A and B is void, as it implies fraud by concealment by A on his principal’. 

Injurious to a person or property of others

Any consideration or object that may inflict an injury to any person or to the property of others shall be void. No agreement should inflict injury to any person or to the property of any person through its performance. In the case of Ram Sarup Bhagat v. Bansi Mandar (1915), the Calcutta High Court struck down the agreement as it led to the Defendant being subjected to human labour without any pay, and hence, it became indistinguishable from slavery, which led to injury to a person.

Immoral

According to the Black’s Law Dictionary, immoral means ‘contrary to good morals; inconsistent with the rules and principles of morality that regard men as living in a community and which are necessary for the public welfare, order, and decency’.

Section 23 states that an agreement that is against the moral principles followed by society in general and that is considered immoral in the eyes of the law shall be void. 

Illustration to Section 23(j) explains a type of agreement which falls under the scope of the immoral act: ‘A, who is B’s mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A. The agreement is void because it is immoral’. In the case of Pranballav Saha and Anr. v. Sm. Tulsi Bala Dassi and Anr. (1958), the Calcutta High Court held that a contract transferring property for the purpose of running a brothel or for prostitution is immoral and void. However, if the contract is made to a prostitute for residential purposes only and not for running a brothel or carrying out her profession, then the contract will be enforceable.

Opposed to public policy

The term ‘opposed to public policy’ included in Section 23 has a wide scope. This term has not been defined anywhere and is left as an open-ended question for the courts to interpret from time to time, as it keeps changing. In a general sense, it means any act which opposes the pre-established interests and morals of the public at large. Although this term has not been defined, there are certain titles which are commonly accepted by the courts as the grounds of public policy. The major heads of public policy are as follows:

Trading with an enemy or foreign entity when the law does not approve it

Enemy entity means any person who is a citizen of the country having war-like situations with India. Any kind of agreement with such an entity is void, as such an agreement is against the interests of the country. They may confer some benefits which pose a threat to the security and integrity of the nation.

Agreements made for hampering the prosecution

Agreements made for suppressing criminal charges are void. The criminal must be punished for the offence committed by him when the same is proved in court. If an agreement is made to protect the offender from getting punished, such an agreement is considered to be in conflict with public policy. In the case of Pakalapati Veerayya v. Devulapalli Sobhanadri (1936), a person entered into an agreement in which he agreed to take back the charges framed against the accused under Section 420 of the Indian Penal Code, 1860. As per the law, this offence may be compounded only with the prior permission of the court, and since the permission was not taken from the court for compounding, the Madras High Court held the agreement made was void.

Agreements in the nature of champerty and maintenance

Champerty and maintenance are two different terms, the latter being the genus and the former just a species. Maintenance means when the litigation is motivated by a person who is not a party and has no interest in the suit against a third person. Champerty, on the other hand, refers to the situation where the litigation is motivated by a person who is not a party himself against a third person, with the intention of sharing the gains from the suit or litigation.

All agreements made for the sale of public offices and titles

Any agreement made for selling or transferring the seats of public offices is unlawful, as such agreements hamper the rights of the deserving candidates who are actually qualified for being appointed to any of the public offices. Titles are given for achieving excellence in any field, and the transfer of the same for any monetary benefit is void. In the case of Sushil Kumar Yadunath Jha v. Union of India and Ors. (1986), a public officer agreed to transfer his post to a public office in exchange for ₹5000. The Supreme Court of India held the agreement void.

Agreements made in restraint of parental rights

As per Indian laws, the father is considered to be the natural guardian of a child, and after him, the mother (except in the case of Muslim law). An agreement made for the sale or transfer of parental and guardianship rights is void. In the case of Annie Besant v. G. Narayaniah (1913), the father had agreed to transfer the guardianship of his two minor sons to Mrs. Annie. Later, he filed a case to seek back the custody of his sons, and the Madras High Court denied him the same on the ground that if the adoption made according to the Hindu Adoptions and Maintenance Act, 1956, is valid, then the custody cannot be sought back.

Agreements made for marriage brokerage

Any agreement made to pay a third party for negotiating, procuring, or bringing about a marriage is void. In the case of Gopi Tihadi v. Gokhei Panda and Anr. (1953), the Orissa High Court held that any contract made for marriage brokerage is illegal and void as it opposes public policy.

All agreements that interfere with the course of justice

Interference with the delivery of justice is not allowed, and any agreement made with such an intention is void. For example, A is guilty of committing theft, and B is the prime witness. A promises B that he will pay him ₹10,000 if B gives a false statement before the court during the proceeding. Such an agreement is void.

Agreements in restraint of personal liberty

The right of personal liberty is a fundamental right of every person provided by the Constitution of India, and any agreement made to restraining the personal liberty of a person is void. In the case of Sitaram Deokaran v. Baldeo Jairam (1957), an agreement was made in which the Defendant signed a naukrinama in which he agreed to serve the Petitioner at a salary of ₹2 per month for a period of 112 and a half months in exchange of a loan for ₹225. After serving the Petitioner for a period of approximately 2 years, the Defendant withdrew from his services and started serving somewhere else as a watchman for presumably more advantageous terms. It was argued by the Petitioner that the Defendant was instigated to withdraw from his services as per the contract. However, the Court stated that there was no evidence to prove the same and that the Defendant may have withdrawn from the services because of the meagre salary. The agreement was declared void by the Court as it restrained the Defendant from serving anywhere else, and the salary given to him was meagre. The Court held that the terms of the contract were unconscionable.

Effect of unlawful consideration

The effect of an unlawful consideration is that the agreement becomes void in the eyes of the law. Section 24 of the Act states that agreements are void if considerations and objects are unlawful, even in parts. The Section states that ‘if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void’. The meaning of this Section is that in an agreement, if any part of the consideration for one object or for more than one object is unlawful or illegal, then the agreement is void. It also states that where multiple considerations for a single object are involved, even if any one of those considerations or any part of a single consideration is unlawful, then the whole agreement becomes void. 

For example, if A and B make an agreement that A will give B 100 gm of gold and, in return, B will give him 500 gm of heroin, such an agreement shall be void because the consideration given by B is unlawful. Under Section 27 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act), the consumption of drugs like heroin is an offence which has a rigorous imprisonment of 1 year or a fine of 20,000 or both. The production, manufacture, possession, sale, purchase, transport, import interstate, export interstate or use of narcotic drugs and psychotropic substances is also an offence punishable with imprisonment and a fine depending upon the quantity of any such drug under Section 21 of the NDPS Act. Hence, any agreement with an unlawful consideration shall be void in the eyes of law.

Difference between lawful consideration and lawful object 

The terms lawful consideration and lawful object are usually considered the same. However, there is a difference between the two terms, and these are, in reality, not synonyms. The object of an agreement essentially means the intention or purpose of the agreement in which the parties enter, whereas the consideration of an agreement means something of value in the eyes of the law. A consideration can be an act or abstinence done in the past, present, or future, moved by the promisee or any other person at the desire of the promisor. Hence, it can be understood that the object is the purpose of the agreement, and the consideration is its value. Both the object and the consideration must be lawful because, many times, it happens that the consideration in an agreement is lawful, but the object is unlawful, or vice versa. In any such case where any of them is unlawful, the agreement becomes void. For example, A agrees to invest in the company of B and becomes the creditor. B, who is insolvent, agrees to return the principal amount with interest in instalments of ₹10,000 every month to A, with the intention of defrauding the creditor. The consideration for the agreement, namely ₹10,000, is legal, but the object, namely defrauding the creditor, is illegal because it violates insolvency law. 

Exceptions to consideration

The Indian Contract Act, 1872, specifically upholds the rule of ‘no consideration, no contract’, implying that no contract or agreement can be made without consideration. Any such agreement made without consideration shall stand void. However, the Act also states certain exceptions to this rule. Section 25 of the Act lays down the situations under which the presence of a consideration is not required for an agreement to be enforceable. The Section talks about the following three exceptions:

  • Natural love and affection: Any agreement made without consideration in writing and registered under the law for the registration of documents between near relatives on the basis of natural love and affection is enforceable and valid. The term ‘near relatives’ is not defined anywhere in the Act; however, it has been explained by the courts in various cases. In various cases, it has been held that near relatives include relations by blood as well as marriage. They do not include remote relations. In the case of Vijaya Ramraj v. Dr. Sir Vijaya Ananda (1950), the Allahabad High Court held that when the promise is registered and based on natural love and affection, it has to be carried out even if the promisor dies before the fulfilment of the promise.
  • Past voluntary service: If a promise is made by the promisor to compensate a person wholly or partly for any service that was performed voluntarily by that person for the promisor. It may be something that the promisor was legally compellable to do. The service must be done for the promisor only and without his knowledge. 
  • Time-barred debt: The promise made in writing and signed by the person who is to be charged or his authorised agent for the payment of time-barred debt is also enforceable and valid. The repayment may be made wholly or partially. The period in which a suit can be filed is saved and commences from the day the borrower acknowledges his debt. 

Conclusion 

Now that we have discussed the concept of lawful consideration, one thing is absolutely clear that where there is no consideration or an unlawful consideration, the agreement is void. For an agreement to be enforceable in a court of law, it is necessary to have a lawful consideration as well as a lawful object present in that agreement. The consideration and object become unlawful if they fall under any of the categories given under Section 23 of the Act, i.e., they must not be illegal, fraudulent, opposed to public policy, forbidden by law, defeat the provisions of law, immoral, or inflict any injury to any person or to the property of any person. If the consideration is unlawful, the agreement becomes void, and even if any one part of the consideration or any part or more than one part of any of the several considerations is unlawful, then the agreement is also void and hence cannot be enforced in a court of law.

Frequently Asked Questions (FAQs)

What is the importance of consideration in a contract?

Consideration is an essential element of a contract, and without consideration, no contract can come into force.

What is past consideration?

As per the Indian Contract Act, 1872, when the promisor receives consideration before fulfilling his/her promise, such a consideration is called past consideration.

What is a lawful object?

The object of an agreement means the intention or purpose of that agreement. Hence, a lawful object means the purpose of the agreement that is in conformity with the law and is not something which is strictly prohibited by law, i.e., it is not unlawful or illegal. 

What happens when the agreement is made with unlawful consideration?

Any agreement made with unlawful consideration becomes void as per Section 24 of the Act and, hence, is not enforceable in a court of law. 

References 

  • Chinnaya v. Ramayya (1882) ILR (1876-82) 4 Mad 137

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