UNLAWFUL CONSIDERATION AND OBJECT

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2 years ago

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This article is written by Meenakshi Asthana, an intern under Legal Vidhiya

Abstract

Indian context there are mainly two consideration types and when i say consideration. I mean the amount or any object paid in as payment for another object usually , in early ages the barter system was introduced barter system is defined as object in trade of object lentils in trade for lentils , vegetable for vegetable and other things , the controversial part was the inappropriate distribution of objects . To ensure proper distribution and regulation ‘money’ is a better and convenient option , so then the two types of consideration , lawful and unlawful however the term object has different meaning than consideration according to legal term and law of contract

Keywords

Consideration, section 23, Natural love and affection, past consideration, future consideration, present consideration, past voluntary services, exceptions to the law of consideration

Introduction

In India it is said that for a contract to be taken understood as a valid contract two things are a must: a lawful object and lawful consideration[1][2]. The term ‘object’. Indicates, purposes of that contract do not really imply importance in a similar sense as the term ‘consideration ‘it is understood that even if the consideration of the contract is purely legally valid but the object of that contract is found to be unlawful in nature, then the contract would be termed as invalid contract. Similarly consideration, which has been defined under section 23 of the Indian contract

Unlawful consideration in a contract

As discussed under the said section of Indian contract Act it is only legal consideration that is supposed to be valid if:

Consideration given is not restricted by law:

If it is understood that if the consideration in a contract given is tend to be prohibited by law, it will be tagged as an unlawful consideration, it would generally count in the acts that are explicitly punishable by the law and it can also count in the acts that are prohibited through the medium of either rules or regulation

Consideration should not be immoral in nature: morality is one of the most brilliant grounds of judgement when it comes to Indian law. Therefore a consideration to a contract is considered to be unlawful one of it has been regarded as an immoral act by the honorable court. In case of consideration the contract would tend to be tagged as invalid or void.

‘’an agreement made without consideration is void ‘’

So hence this is proved that consideration is a very crucial element of a contract. Consideration is a quid pro quo Section 2{d}

Of the Indian contract Act defines consideration as follows. ‘when at the desire of the promissory, the promises or any other person has done or abstain from doing or does or abstain from doing or promise to do or abstain from doing something, such act or abstain or promise is called a consideration for the promise

This consideration may take the form of delivery of anything which has a monetary value or payment in any other form of value, itself or rendering some services, or doing something which under law, a person is bound to do (Eg: forbearance to sue) or a promise to do any or all of those things

Now as Indian, I have to tell you details in form of illustration so that these complex words have a simpler meaning to it:

Illustration:

A agrees to sell his house to B for ®25000. here B’s promise to pay ®25000 is consideration for A’s promise to sell his house is the consideration for B’s promise to pay ®25000

Legal Rules for a Valid Consideration:

Consideration must move at the desire of promissory section 2(d) provides that the act or abstinence which is to be consideration, must be done or promised to be done at the desire of the promissory. there must be a link between desire of promisor and act or forbearance on the part of promise. This act forbearance on part of promise should not be at the instance of third party
Consideration must move from the particular promise should or any other person-Unlike in English law where the consideration must flow from the promise only, here consideration may proceed from the promise or any other party. Section 2(d) expressly provided that consideration. May move from the promise or any other person
It may be past present or future.

(Executed, executory and past consideration) section 2(d) of the act provides that consideration is an act which has been done or abstained from doing at desire of promisor (past consideration) or does or abstains from doing (executed or present consideration) or promise to do or abstain from doing (executory or further consideration)

For example- if A finds B’s dog and gives it to him & B promises to give A For ®2000 here act has been done before the promise has been made. It is called past consideration

Consideration must not be illusory but r Al and competent – if the consideration is vague or does not fit the caliber of the deal, it’s uncertain, illegal, impossible, it has no value in the Eyes of law, a man promises to convert an ordinary paper into currency notes, or to make parallel lines meet it is illusory consideration, just as we say I will pay you 10000000 ® if Titanic returns, the promise in itself is vague only as the Titanic has already sunk
Consideration need not be adequate -explanation 2 of section 25 lays down that ‘an agreement to which the consent of the consent of the promisor is freely given is not void merely because the consideration is inadequate, but inadequacy may be taken into account by court in determining the question whether the consent of promisor was freely given
Preexisting obligation – if a person is already to B bound by statutory or official duty to do a particular act the performance of the act cannot be the consideration for a promise. Similarly, an agreement to perform a contractual duty with a person to whom it is already owed is not made for consideration

However, a promise to A by B to perform an existing obligation to C will suffice to support a promise by C to A.

Consideration must be legal or lawful section 23 of the act provides that consideration or object of an agreement is lawful unless: –
Forbidden by law
Of such nature that, if permitted, it would defeat provisions of any law;
Fraudulent
Includes injury to another person body or property
The court considers it as immoral or something that does not fall in line with public policy

However with all these laws the fundamental law is everything in law has an exception for that matter the lively good of lawyers are dependent on the loopholes they are supposed to find during the entire case, consideration may be past present or future, void, Valid, invalid

But it all comes down to the exception that it has

Let us see what could be the possible exception to the rule of consideration

We all know that section 25 Indian contract Act provides that an agreement made without consideration is void, but this section however also states some exceptions such that it was an agreement that was not a result of an offer with consideration these are some exceptions
Natural Love and affection

If someone has willingly with their own unforced consent decides to pass on their property to a person, they are affectionate towards in that kind of scenario it doesn’t require a proper consideration-based contract, but to be clear the agreement can only be between ‘near relations’ means parties related by blood or by marriage.

Past voluntary service

^[3]This may contain something that will leave you flabbergasted , suppose Britney’s dog went missing and she posted an offer that whoever brings her dog back she will pay them 3000® , Robert in good faith without reading the offer brings the dog back , here the offer didn’t make it to Robert as he did not read it but as a good person Britney paid him the 3000® which he deserved this is called past voluntary service where concept of doing or not doing something and in exchange of that we pay them the monetary value of it stands void and null as the offer didn’t even made it to the person who performed it

Statutes & case laws:

Shri achoo Mal. V Shri radhey Shyam

Every agreement of which the object Or consideration is unlawful is void. It was not something that has been considered or conferred as contractual agreement which they could give up or waive by agreement or contractual arrangement and whether the consideration or object of such an arrangement and whether the consideration or object of such an agreement would not be lawful within the property act 1925 section 23 of the Indian contract Act provides ‘the consideration is lawful no matter how small it is in proportionate cause of the subject matter but if the object the very object of offer is unlawful it makes the consideration unlawful as well

Gherla Parikh V. Mahadeo as Amiya and others court: Supreme court of India

Subba Rao J. This appeal filed against the judgement if the High Court of Judicature at Calcutta raised the question of the legality of a partnership to cam on the business in wagering contract.

Facts – The case concerns the legality of a partnership to carry on business in wagering contracts. The partnership was between the two joint families of the appellant & the first respondent respectively. The high court held that the partnership was only between the two managers of the said families and therefore it was valid, the suit was filed for recovery of a certain amount of money. The defendant denied that there was any partnership to enter into forward contracts with the said two merchants. The problems presented is whether the said agreement of partnership is unlawful within the meaning of section 23 of the ICA

Issues:

So here we have to decide the partnership was unlawful within the territories of the meaning and definition of section 23 of the ICA

Rule:

The common law of England and that of India have never struck down contracts of wager on the ground of public policy indeed they have always been held to be not illegal notwithstanding the fact of the stated law that had declared them void

Analysis

The partnership was held valid by HC. THE Indian courts have never struck down wagering contract on the ground of public policy, it’s in the common law of England however India stood it’s ground never got wagering contract valid they stand void but not illegal

Conclusion

The suit partnership was not unlawful within the meaning of section 23, of ICA disposition: the appeal failed and stands dismissed

Harbhajan Singh V. Karam Singh and others
{Roop Chand vs State Of Punjab on 10 October, 1962}
Ramaswami J-This appeal is bringing ought by special leave from the judgement and decree of the Punjab High court dated on April 19^th 1960s in letters patent appeal no. 128of 1960
{Rudra Gowda Yeshvantgowda vs Gangowda Basagowda Patil on 29 June, 1937}
{Saradambal Ammal vs A.M. Natesa Mudaliar on 23 November, 1970}
Bindeshri Prasad V. Sarju Singh

Court: Allahabad HC

According to general mindset this plea cannot be claimed or maintained. It’s argumentative that learned judges of the court below that the consideration, so far as it concerns this sum should be 1200®, WAS NOT AN UNLAWFUL CONSIDERATION. Within the meaning of section 23 of the contract Act 7. Further it cannot, we think be having a discussion that there was no consideration for the 1800 was made to the defendant and that there was, therefore real consideration for the bond. The court below finds that the plaintiff would not have advanced 1800® without the undertaking.

{Sabava Yellappa vs Yamanappa Sabu on 30 November, 1932}

{Rajinder Singh And Ors. Vs Financial Commissioner And Ors. On 31 May, 2005}

Jai Lal V state of Haryana

The petitioner has complained that they built the entire residential houses in rectangle no. 52-53 and because they had their share of difficulties in passing through the shamlat johar, but if a pathway is made through the Jai Lal’s land in Killa no. 52/16. It would be beneficial.

{M.L.M. Ramanadan Chettiar vs Gundu Ayyar And Ors. On 3 May,}

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References

[1] Unlawful Consideration and Object – Legal PaathShala Unlawful Consideration and Unlawful Object under Contract Law

[2] Unlawful Consideration/Object is Void [SEC 23]- Indian … – Prolawctor