Section 23. What considerations and objects are lawful, and what not.
The consideration or object of an agreement is lawful, unless—
it is forbidden by law; or
is of such a nature that, if permitted, it would defeat the provisions of any law; or
is fraudulent; or
involves or implies injury to the person or property of another; or
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.
Illustrations
(a) A agrees to sell his house to B for 10,000 rupees. Here, B’s promise to pay the sum of 10,000 rupees is the consideration for A’s promise to sell the house, and the promise to sell the house is the consideration for B’s promise to pay the 10,000 rupees. These are lawful considerations.
(b) A promises to pay B 1,000 rupees at the end of six months, if C, who owes that sum to B, fails to pay it. B promises to grant time to C accordingly. Here, the promise of each party is the consideration for the promise of the other party, and they are lawful considerations.
(c) A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here, A’s promise is the consideration for B’s payment and B’s payment is the consideration for A’s promise, and these are lawful considerations.
(d) A promises to maintain B’s child, and B promises to pay A 1,000 rupees yearly for the purpose. Here, the promise of each party is the consideration for the promise of the other party. They are lawful considerations.
(e) A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them by fraud. The agreement is void, as its object is unlawful.
(f) A promises to obtain for B an employment in the public service, and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful.
(g) A, being 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 a fraud by concealment, by A, on his principal.
(h) A promises B to drop a prosecution which he had instituted against B for robbery, and B promises to restore the value of the things taken. The agreement is void, as its object is unlawful.
(i) A’s estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing the estate. B, upon an understanding with A, becomes the purchaser, and agrees to convey the estate to A upon receiving from him the price which B has paid. The agreement is void, as it renders the transaction, in effect, a purchase by the defaulter, and would so defeat the object of the law.
(j) 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.
(k) A agrees to let her daughter to hire to B for concubinage. The agreement is void, because it is immoral, though the letting may not be punishable under the Indian Penal Code (45 of 1860).
Explanation of Indian Contract Act 1872 Section 23
Section 23 specifies that an agreement is void if its consideration or object is unlawful, ensuring contracts uphold legal and ethical standards.
Unlawfulness arises if the consideration or object is forbidden by law, defeats legal provisions, is fraudulent, causes injury to person or property, or is deemed immoral or against public policy.
If either element is unlawful, the entire agreement is unenforceable, protecting societal interests by preventing contracts that violate law or morality. Section 23 promotes fair and lawful agreements by invalidating those with illicit purposes or exchanges.
Key Points of Section 23 Indian Contract Act 1872
- Scope: Defines lawful and unlawful consideration or object in agreements.
- Void Agreement: Unlawful consideration or object renders the agreement void.
- Grounds for Unlawfulness:
- Forbidden by law (e.g., illegal acts like smuggling).
- Defeats legal provisions (e.g., evading statutory restrictions).
- Fraudulent (e.g., deceiving others for gain).
- Causes injury to person or property (e.g., contracts for harm).
- Immoral or against public policy (e.g., unethical or anti-social acts).
- Consideration or Object: Unlawfulness of either voids the contract.
- No Remedies: Void agreements are unenforceable, offering no legal relief.
- Burden of Proof: Party challenging validity must prove unlawfulness.
Analysis of Illustrations
- Illustration (a): A’s promise to sell a house and B’s promise to pay Rs. 10,000 are lawful considerations, as they involve a legitimate transaction, making the agreement valid.
- Illustration (b): A’s promise to pay B if C defaults and B’s promise to extend time to C are lawful considerations, forming a valid contract.
- Illustration (c): A’s promise to insure B’s ship and B’s payment are lawful considerations, creating a valid insurance contract.
- Illustration (d): A’s promise to maintain B’s child and B’s payment of Rs. 1,000 yearly are lawful considerations, making the agreement valid.
- Illustration (e): A, B, and C’s agreement to share fraudulent gains is void, as the object (fraud) is unlawful.
- Illustration (f): A’s promise to secure public employment for B in exchange for Rs. 1,000 is void, as the consideration (bribery) is unlawful.
- Illustration (g): A’s agreement to obtain a lease for B by concealing it from his principal is void, as it involves fraud.
- Illustration (h): A’s promise to drop a robbery prosecution in exchange for B’s repayment is void, as the object (compounding a crime) is unlawful.
- Illustration (i): B’s agreement to buy A’s estate to circumvent a legal prohibition is void, as it defeats the law’s purpose.
- Illustration (j): A’s promise to influence B for C’s benefit in exchange for Rs. 1,000 is void, as it is immoral.
- Illustration (k): A’s agreement to hire her daughter to B for concubinage is void, as it is immoral.
MCQs on Section 23
- Question: Under Section 23, an agreement is void if its object is:
- A) Lawful and documented
- B) Forbidden by law
- C) Mutually beneficial
- D) Based on mutual mistake
- Answer: B) Forbidden by law
- Explanation: Section 23 voids agreements with objects forbidden by law, as per its text.
- Question: As per Illustration (f), why is A and B’s agreement void?
- A) It involves lawful consideration
- B) The consideration is bribery for public employment
- C) The agreement is oral
- D) Both parties are mistaken
- Answer: B) The consideration is bribery for public employment
- Explanation: Illustration (f) shows the agreement is void due to unlawful consideration.
- Question: Which of the following is unlawful under Section 23, as shown in Illustration (k)?
- A) Selling a house
- B) Hiring for concubinage
- C) Insuring a ship
- Answer: B) Hiring for concubinage
- Explanation: Illustration (k) declares agreements for concubinage void due to immorality.