Under Section 23 of the Indian Contract Act, 1872, the object or consideration of an agreement is not lawful in certain situations. An agreement is void when its object or consideration is unlawful.
Section 23 provides that the consideration or object of an agreement is unlawful if it falls under any of the following categories:
- It is Forbidden by Law
An object is unlawful when the agreement involves something that is directly prohibited by law.
Example:
A agrees to pay B ₹50,000 to obtain a government licence through an illegal method. The object is forbidden by law, so the agreement is void.
- It Defeats the Provisions of Any Law
Even if the object is not directly prohibited, it is unlawful if allowing the agreement would defeat or circumvent the purpose of a law.
Example:
A enters into an agreement designed to avoid a statutory restriction imposed by law. Such an agreement is void because its object defeats the provisions of law.
- It is Fraudulent
An agreement is unlawful if its object or consideration involves fraud.
Example:
A agrees to transfer property to B so that B can fraudulently conceal it from A’s creditors. The object is unlawful because it involves fraud.
- It Involves or Implies Injury to the Person or Property of Another
An agreement is unlawful when its purpose involves causing injury to another person’s body, reputation, property, or other legally protected interests.
Example:
A promises to pay B ₹20,000 if B damages C’s property. The object is unlawful because it involves injury to another person’s property.
- It is Immoral
An agreement whose object or consideration is regarded by law as immoral is void.
Example:
An agreement to provide money for an unlawful sexual relationship may be treated as having an immoral object and therefore be void.
- It is Opposed to Public Policy
An agreement is unlawful when its object or consideration is against public policy, meaning it is harmful to the interests of society or contrary to established principles of public welfare.
Examples:
An agreement intended to improperly influence the administration of justice.
Certain agreements restricting lawful legal proceedings.
Agreements involving improper interference with public duties.
Section 23 — Quick Summary
Object/Consideration is unlawful when it is Meaning
Forbidden by law Directly prohibited by law
Defeats the provisions of law Circumvents or defeats a legal provision
Fraudulent Involves fraud
Involves injury Causes injury to person or property
Immoral Contrary to legally recognized morality
Opposed to public policy Harmful to public interest or social welfare
Legal Effect
If the object or consideration is unlawful, the agreement is void and cannot be enforced by law.
Exam-Friendly Conclusion
Thus, under Section 23 of the Indian Contract Act, 1872, the object of an agreement is not lawful when it is forbidden by law, defeats the provisions of law, is fraudulent, involves injury to a person or property, is immoral, or is opposed to public policy. Such an agreement is void because the law will not enforce an agreement founded on an unlawful purpose.
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