UNIT.

5 CONSIDERATION AND
LEGALITY O F OBJECT
Structure
5.0 Objectives
5.1 Introduction
5.2 What is Considerat~on?
5.3 Legal Rules for Valid C'orl\idc~.alion
5.4 Stranger to a C o ~ l ~ ~ .rind
a c t Stranger to Consideration
5.5 Adequacy of Consideration
5.6 Legality of Agreements wilhout Consideration
5.7 Legality of Object and Consideration
5.8 Agreements Opposed to Public Policy
5.9 Let Us Sum Up
5.10 Key Words
5.11 Answers to Check Your Progress
5.12 Terminal Questions

5.0 OBJECTIVES
After studying this unit, you should be able to:
describe what is consideration
explain what is lawful consideration and its significance in relation to the validity
of a contract
explain how inadequacy of consideration does not affect the validity of a
transaction e,
state the exceptions to the rule 'no consideration, no contract'
, <

explain when the object or the consideration shall be unlawful

describe the agreements which are considered opposed to public policy.

5.1 INTRODUCTION

In Unit 1 you learnt about the essentials of a valid contract. One such essential, as
per Section 10 of the Indian Contract Act, is 'lawful consideration'. In this unit you
will learn about the meaning of consideration, rules of a valid consideration, effect
of inadequate consideration on ,the validity of an agreement, enforceability of
agreements without consideration and the circumstances under which consideration
is regarded as unlawful. You will also study about the agreement which are declared
opposed to public policy.

5.2 WHAT IS CONSIDERATION?

In Mercantile law, the term 'consideration' is used in the sense of quid pro quo
which in turn meaps 'something in return'. This 'something' may be some benefit.
right, interest or profit that may accrue to one party or it may be some forbearance,
detriment, loss or responsibility upon the other party. This explanation of
consideration was given in a very popular English case of Currie v. Misa. Another
simple and good description of 'consideration' is available in Sir Pollock's definition.
In his book 'Pollock on Contracts', he says, "consideration is the price for which the
promise of the other is bought, and the promise thus given for value is enforceable".
Section 2(d) of the Indian Contract Act defines 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 porn doing
something, such act or abstinence or promise is called a consideration for the
promise.
 Generrl Law of Contrsctr fl Examples
1 A agrees to sell his house to B for Ks. 10,00,000. Here B's promise to pay
Rs. 10,00,000 is the consideration for A's promise'to sell the house and A's td sell,
the house is the consideration for B's promise to pay Rs. 10,00,000.
I
2X promises his debtor Y not to file a suit against him for one year on \C's
agreeing to pay him Rs. 100 more. Here the abstinence of X is the consideration
for Y's promise to pay.
Thus, all contracts consist of two clearly separable parts (i) the promise, and (ii) the
consideration for the promise. A person who makes a promise to do or to abstain
from doing something usually does so as a return for some loss, dayage, py
inconvenience that may have or may have been occasioned to the o t h e ~party in
respect of the promise. The benefit so received or the loss, damage or inconvenience
so caused is regarded in law as the consideration for the promise. It should be noted
+,thata promise without consideration is purely gratuitous and, however, sacred and
morally binding it may be, i,t cannot create a legal obligation. "No consideration, no
Conlract" is the rule of' law. The following two cases prove this point.
Abdul Aziz v. Mazum Ali: In this case a person verbally promised the Secretary of
the Mosque Committee to subscribe Rs.500 for rebuilding of a mosque. Cater, he
declined to pay the said amount. Held, there was no consideration and hence the -
agreement was void.
Kedarnath v. Gorie Mohammad; In thb Case the defendant had agreed to silbscdbg
Rs. 100 towards the construction of a Townhaji at H.owrah. O n ~ h faith
e of the
promise, the Secretary called for plans and entrusted the work tn contractors and
undertook liability to pay them. Held, the agreement was enforceable being one
supported by consideration in the form of a detriment tc the Secretary who had
undertaken a liability to the contractors on the faith of the promise made by the
defendant.

5.3 LEGAL RULES FOR VALID CONSIDERATION

If you analyse the definition of consideration as per Section 2(d), you may notice
certain essential features which are necessary for consideration to be valid and
acceptable legam. These features are also n o w n as the tegql rules for ponsiderqtiop.
Let us now study such rules in detail.

I Consideration must move at the desire of the promisor; To make a contract

binding and enforceable, it is not sufficient that there is consideration but also
that consideration has been supplied at desire of the promisor. Thus, where an
act is done at the desire of a third party and not the promisor, that act cannot
constitute valid consideration. For example, D constructed a market at the
instance of the Collector of a district. The occupants of the shops in the said
market promised to pay D a commission on articles sold through their shops.
Held, there was no consideration because the money was not spent by the
plaintiff at the request of the defendants, but voluntarily for a third person and,
thus, the contract was void (Durga Prasad v. Baideo).

I t does not mean, however, that a promisor must get the benefit person'ally. The
consideration may accrue to the third party at the request or desire of the
promisor. For example, A, who owes Rs.20,000 to B, persuadedrC to pass a
promissory note for the amount in favour of B. C promised B that he would pay
the amount (by passing o n a promissory note), and B credited. the amount to
A's Account in his books. The discharge of A's account was consideration for
C's promise (through C the promisor had not the received benefit) National
Bank of Upper India v. Bansidhar.
2 Consideration may move from the promisee or any other person. The second
rule as t o consideration is that the act which is to constitute consideration may
be done by the promisee himself or by any other person. "Any other person"
(that is, a person other than the grorrisee) is technically referred t o as stranger
to consideration. This is sometin~escalled as doctrine of constructive
consideration. It means, that, as long as there is a consideration for a promise, it
is immaterial who has furnished it.
 The case of Chinnayya v. Ramayya is a good illustration on the point. In :hi!, Consideration and Legality
case, A by a deed of gift transferred certain property to her daughter, with a af object
direction that the daughter should pay an annuity to A's brother, as had been
done by A. O n the same day the daughter executed a writing in favour of the
brother, agreeing to pay the annuity. Afterwards, she declined to fulfil hcr
promise saying that no consideration had moved from her uncle ('A's brother')
The Court, however, held that the words 'the promisee or any other person' in
Section 2(d) clearly show that the consideration need not necessarily move from
the promisee, it may move from any othcr person. Hence. A's brother was
entitled to maintain the suit.

3 Consideration may be past, present or future. The words used in Section 2(d)
are "has dohe or abstained from doing" refer to past. Similarly, the words "does
or abstains from doing" refer to present, and the words "promises to d o or t o
abstain from doing" refer to future. Accordinglv in India, consideration may be
past, prescnt or future.

Past Consideration : Past consideration is somctlling wholly done, forborne or suffered

before the making of' the agreement.

Examples
1. A, a minor, was given the bene'fit of certain services by the plaintiff. The plaintiff
rendered those services, not voluntarily but at the desire of A. These services
were continued even after majority at the request of A who subsequently
promised to pay an annuity to the plaintiff. It was held that the past
consideration was a good consideration. (Sindhc v. Abraham)

I
2. A renders some services to B at B's request in the month of November. In
December B promises to pay A a sum of Rs. 100 for his services. The services of
A will be past consideration. A can recover the past amount.
But under English Law past consideration 1s n o consideration'. Thus, if the above
promise was made in England, it could not have been enforceable.

Present Consideration : Consideration which moves simultaneously with the

promise is called present consideration. 'cash sales' is an excellent example of the
present consideration.

Future Consideratibn: When the consideration is to move at a future date, it is

called future or executory consideration. It takes the form of a promise to be
perfbrmed in the future. For example, A promises B to deliver him 100 bags of
wheat at a futnce date. B promises to pay for it o n delivery.

4 Consideration must be of some value: Consideration as defined under Section

2(d) of the Indian Contract Act means some act, abstinence or promise on the
part of the promisee or any other person which has been done at the desire of
the promisor. Should it mean that even a worthless act will be sufficient t o make
a good consideration if it is only done at the promisor's desire? If. for exgmple,
promises t@:&ive h$ ne.w Maruti car to B, provided B will fetch it from the
I
garage. ,Thf'da~tof &king the car cannot by any stretch of imagination be
called a qn$ldeff&ion for the promise. Yet it is the only act the promisor desired
I
the promlee tu do. Such an act no doubt, satisfies the words of the definition,
but it does not catch its spirit. In Chidambara v. P.S. Ranga, .Justice Subba Rao
of Supreme Court observed that consideration shall bc "something" which not
I only the parties regard but the law can also regard a s having some value.
I Similarly, in Kulasekaraperumal r. Pathakutty, Justice Srinivasan of Madras
High Court observed that though the Indian Contract Act does not 'in terms-so
require, consideration must be good or valuable. It must be real and not illusory.
For example, A promises to pay an existing debt punctually if B, the creditor,
-
gives him, some discount. The agreement is without consideration a s the
discount cannot be enforced as consideration being unreal and illusory.

5 Consideration must be Legal: Consideration which i s not legal, naturally, has no

value in the eyes of the law and, therefore, cannot be a real consideration-

Thus, the main points of Legal Rules for Consideration are as follows: 7
1
General Law of Contracts 11 1 Consideration must move at the desire of the promisor
2 Consideration may be supplied by the promisee or any other person
3 Consideration may be past, present or future
4 Consideration must be of some value, i.e., it must be real and not illusory
5 Consideration must be legal.

5.4 STRANGER TO A CONTRACT AND S,TRANGER

TO CONSIDERATION
You have learnt that in India, consideration is permitted t o be supplied by any
person and it need not necessarily be supplied by the promisee himself. Thus, the
concept of 'stranger to consideration' is a valid and acceptable concept. However, a
stranger to the consideration must be distinguished from a stranger to a contract. A
stranger t o a contract means a person who is not a party t o the contract. Such a
person cannot even in India, bring a valid suit. For example, A who is indebted t o
B, sells his property t o C and C promises to pay off the debt to B. In case C fails to
pay, B has no right to sue C being stranger to the contract.
Exceptions
The aforesaid rule that a stranger to a contract cannot sue is, however, subject -to
certain exceptions. In other words, even a stranger to a contract may enforce a claim
in the following cases : .
1 In the case of trusts, the beneficiary may enforce the contract. In Khwaja
Muhammad v. Mussaini Begum, H sued her father-in-law K to recover
Rs. 15,000 being the arrears of allowance called Kharchi-i-Pandan-betel box
expenses (Pinmoney) payable to her by K under an agreement made between K
ant H's father, in consideration of H's marriage to K's son D. Both H and D
were minors at the time of marriage. The Privy Council held the promise to be
enforceable by H.
2 On the same principle, the provision of marriage expenses of female members of
a Joint. Hindu Family entitle the female member to sue for such expenses on a
partition between male members (Rakhmanbai v. Govind).
3 I n the case of an acknowledgement of liability or by past performance thereof. .
Where X receives money from Y for paying it t o Z and X admits to Z the
receipt-of that amount, then X becomes the agent of Z and will be liable to pay
the amount to him.
4 In the case of a family settlement, if the terms of the settlement are reduced into
writing, the members of the family who originally had not been parties to the
settlement, may enforce the agreement. Shuppu v. Subramanium.
5 In the case of assignment of a contract, when the benefit under a contract has
been assigned, the assignee can enforce the contract. Kishan La1 Sadhu v.
Pramlla Bale Dasi.

5.5 ADEQUACY OF CONSIDERATION

'
In fact, adequacy of consideration is always the lookout of the promisor. Courts d o
not see whether every person making the promise has recovered full return for the
promise. Thus, if 'A' promises to sell a house worth Rs. 8,00,000 for Rs. 80,000 only,
the inadequacy of the price in itself shall riot render the transaction void. But where
a party pleads coercion or undue influence or fraud, inadequacy of consideration will
also be a piece of evidence to be looked into. Far example, B agrees t o sell a horse
worth Rs.1,000 for Rs. 10, B denies that his consent to the agreement w& freely
given. .The inadequacy of consideration is a fact which the Court should take into
account in considering whether or not B's consent was freely given. Section 25
(Explanation 2) of Indian Contract Act also states that an agreement to which the
consent of the party is freely given is not void merely because the consideration is
inadequate; but the inadequacy of the consideration may be taken into account by
the Court in determining the question whether the consent of the promisor was freelg
given.
I
Check Your Progress A
1 What is consideration?
................................................................................................................................

2 What is quid-pro-quo?

................................................................................................................................
. -..

3 At whose desire should consideration move?

4 Is past consideration valid? . .

5 Can consideration move from a stranger?

,6 Fill in the blanks:

i) Consideration.. ..........,......move at the desire of. .................
; ii) Consideration need not be.. .................but it must be of
some.. ...................in the eyes of law.
iii) A contract without consideration is. ................

7 State whether following statements are True or False.

i) An act constituting consideration must have been done at the desire or
request of the promisor or a third party.
ii) Consideration must result in a benefit to both the parties.
iii) Past consideration is no consideration.
iv) Consideration may move from the promisee or any other person.
v) A stranger to a contract may sue upon it if the contract is for his benefit.
vi) Consideration must be proportionate t o the value of the promise.
vii) A stranger to consideration can sue.

5.6 LEGALITY OF AGREEMENTS WITHOUT

CONSIDERATION
As discussed earlier, as per Section 10 of the Indian Contract Act consideratian is an
important element for a contract to be valid. Section 25 echoes this view and
declares a contract without consideration as void. However, it also recognises certain
,exceptions, Besides, section 185 also provides for a case where a contract without
consideration shall be valid. Thus, the circumstances under which a contract, in spite
of no consideration, may be enforceable are stated below:
1 Agreements in writing and registered: An agreement made without
consideration is valid if it is.:
4,. exprc;sseg in writing,
General Law of Contracts I1 b) registered (under the law for the time being in force for registration of
documents),
c) made on account of natural love and affection, and
d) is between parties standing in a near relation to each other. For example,
an elder brother, on account of natural love and affection, promised to pay
the debts of his younger brother. The agreement was put to writing and
was registered. Held, the agreement was,valid. (Venkataswamy v.
Rangaswamy)

You she-uld note that for an agreement to be valid under this clause, the
agreement must be the result of natural love and affection. Nearuess of
relation by itself does not necessarily import natural love and affection.
Thus, where a Hindu husband by a registered document, after referring to
quarrels and disagreements between himself and his wife, promised to pay
his.wife a sum of money for her maintenarice and separate residence, it was
held that the promise was unenforceable Rajlakhi Devi v. Bhootnath.

2 Promise t o compensate-Section 25(2): A promise made without consideration

is valid.if
. a) it is a promise to compensate (wholly or in part).
b) the person to be compensated has already done something voluntarily,.or
has done something which the promisor was legally co'mpellable to do.

Examples
1 A finds B's purse and gives it to him. B promises to give Rs. 100 to A, This
is a valid contract even though A was not engaged for the purpose by B and.
therefore, consideration did not move at the desire of B, the promisor.
2 A supports B's infant son without asking. B promises to pay A's expenses
for so doing. Once again, this is a contract.

3 Prdmise t o pay a debt barred by limitation act-Section 25(3): A ~romiseto pay

a debt barred by Limitation Act shall be valid without consideration because
legally it remains no longer claimable. You'should know that a debt becomes
barred under the Limitation Act, if the same is not claimed within a period of 3,
years. However, a promise to pay a time barred debt (wholly or in part) shall be
valid if
i) the promise is put into writing
ii) signed by the debtor or his agent, and
iii) relues to a debt which the creditor might have enforced payment offbut for
the law of limitation.

For Example, X owes Y Rs. 800, but the debt is time barred. X signs a written promise
to pay Rs. 600 on account of the debt. This is a valid contract (Section 25).

4 Completed gifts: The ru1e.n~consideration, no contract does not apply to

completed gifts. These need not be the result of natpral love and affection or
near relation, but the gifts must be complete. (Explanation 1 t o Section 25).
Completed gifts mean gifts made and accepted. However a promise to gift is not
valid.

5 Agency: For creation of an agency, no consideration is required. You should +

note that, however, if no consideration has passed t o the agent, he is only a

gratuitous agent and is not bound to do the work entrusted to him, althbugh if
he begins the work he must do it to, the satisfaction of his principal (Section
185).
d. Charity: If a person promises to contribute to charity and on this faith the
'
promisee undertakes a liability t o the extent not exceeding the promised
subscription, the contract shall be valid (Kedarnath v. Gorie Mohammad).

4 10 T o sum up, a n agreement without consideration'shall be valid in the following cases:

 Consideration and Legality
1 If the agreement is in writing and registered resulting from natural love and
affection between persons in near relationship. of object

2 If it is a promise to compensate for something voluntarily done for the promisor.

3 If it is a written promise to pay a debt barred by the law of limitation.
4 If it is a promise with regard to completed gi.fts, i.e., gifts rr~adejandaccepted by
the other.
5 If it relates to creation of an agency.
6 If it is a promise to contribute to charity and with this faith, the promisee
undertakes a liability.

In most of the cases, the words 'Object' and 'Consideration' mean the same
thing. But in sotne cases they may be different. For example, where money is
borrowed for the purpose of the marriage of a minor, the consideration for the
contract is the loan and the object is the marriage. We have already noted that a n
agreement will not be enforceable if its object or the consideration is unlawful.
According to section 23 of the Act, the consideration and the object of an agreement
are unlawful in follow~ngcases :

1 If it is forbidden by law: If the object or the consideration of an agreement is

the doing of an act forbidden by law, the 4greement is void. An act or a n
undertaking is forbidden by law when it is punishable by the criminal law of the
country or when it is prohibited by special legislation derived from the
legislature.

Examples
i) A loan granted to the guardian of a minor to enable him to celebrate the
minor's marriage in contravention of the Child Marriage Restraint Act is
illegal and cannot be recovered back (Srinivas v. Raja Ram Mohnn).
ii) A promises to drop prosecution which he has instituted against B for
robbery, and B promises to restore the value of the things taken. The
agreement is void, as its o.bject is unlawful (Illustration (h) t o Section 23).

2 - If it defeats the provisions of any law: If it is of such a nature that if permitted,

it would defeat the provisions of any law. In other words if the object or the
consideration ofla11 agreement is of such a nature that, though not directly
forbidden by law, it would defeat the provisions of the law, the agreement is
void. For example, 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 the understanding with A, becomes the
purchaser and agrees to convey the estate to A for 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 (IIlustration (i) to Section
23).

3 If it is fraudulent: A n agreeme'nt with a view t o defraud others is void. For

example,'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.
4 If it involves or implies injury to the person or property of another. If the object
of an agreement is to injure the person or property of another, it is void. For
example, A borrowed Rs. 100 from B. A executed a bond promising to work for
B without pay for 2 years and in case of default agreed to pay interest a t a very
1 exokbitant rate and the principal amount a t once. Held, the contract was void
(Ralm Saroop v. Bansi).
5 If the Court regards it as immoral or opposed to public policy: An agreement
whose obiect or consideration is immoral o r is opposed to the public policy, is
General Law of Contracts I1 void. For example, A let a cab on hire to B, n prostitute, knowing that it would
be used for immoral purposes. The agreement is void (Pearc'e v. Brooks).

Partial Illegality
Section 24 of the Indian contract Act provides that if any part of a single
consideration for one or more objects, or any one or any part of any one of several
consideration for a single object, is unlawful, the agreement is void. For exampre, A
promises to supervise the business on behalf of B, a licensed manufacturer of some
permissible chemicals and some contraband items. B promises to pay A a salary of
Rs. 10,000 per month. The agreement is void, the object of A's promise and the
consideration for B's promise being in part unlawful.

It is well settled that if several distinct promises are made for one and the same
lawful consideration, and one or more of them be such as the law will not enforce,
that will not of itself prevent the rest from being enforceable. The test is whether a
distinct consideration which is wholly lawful can be found for the promise called in
question. According to Justice Wiles, the general rule is that, where you cannot sever
the illegal from the legal part of a convenant, the contract is altogether void; but
where you can sever them, whether the illegalily be created by statute or by the
common law, you may reject the bad part and retain the good.

Check Your Progress B

I State whether the following statements are True or False.
i) A promise to gift is enforceable by the donee.
ii) A verbal promise to pay a debt barred by the Limitation Act is
enforceable.
iii) A promise to compensate a voluntary act done in the past id valid,

iv) An agent is bound to do a promised act in spite of no quid pro quo.

v) An agreement t o commit fraud is voidable.

2 A agrees for illicit cohabitation with B. B agrees to pay a fixed monthly

allowance in consideration of her services.
i) State whether the agreement is valid o r not. Give reasons.

ii) Is the agreement yalid if the payment is in respect of past cohabitation with
a married woman with or without the knowledge of her husband?

3. A few persons agree t o purchase shares of a cornpany in ordel- to induce other

persons to believe, contrary to the fact, that there is a bonafide market for the
shares. Is such an agreement lawful?

5.8 AGREEMENTS OPPOSED TO PUBLIC BPOLPCY-

-
It is very difficult t o define the term 'public policy' with any degree of precision
because4public policy', by its very nature, is highly uncertain and fluctuating. It
keeps on varying with the habits and fashions of the day, with the growth of
12 commerce and usage of trade. In England, Lord Halsbury in case of Janson v.
 Drieftein Consolidated Mines Etd, observed "that categories of public policy are Consideration and Legality
closed, and that no court can invent a new head of public policy." Section 23 of the of object
Indian Contract Act, however, leaves it open to court to hold any contract as
unlawful on the ground of being opposed to p~lblicpolicy.
In simple words, it may be said that an agreement which sasnfllcts with morals of the
time and contraveinos any established interest ujf society, it is void as being against
public policy. Thus, an agreement ~hi,;h tends to be injurious to the public or
against the'public good is void as being opposed to public policy. According to
Mulla, "Agreements may offend against the public policy, or tend to the prejudice of
the State in time of war (trading with the enemies, etc.), by tending to the perl~.rsion
or abuse sf municipal justice, (stifling prosecution, champerty, maintenance) or in
private life by attempting to impose inconvenient and unreasonable restrictions on
the free choice of indk;Sbals in marriage or their liberty to exercise any lawful
c;
t r a d i n ~ ,,;iing."
U

Heads 6f Public Policy

The commonly accepted grounds of public policy include:
1 Trading with Enemy : All contracts made with an alien (foreigner) enemy, unless
made with the permission of the Government, are illegal on the ground of public
policy.
2 Agreements for stifling prosecution: Contracts for compounding or suppressing
of criminal charges for offences of a public nature are illegal and void. The Law
states "you cannot make a trade of your felony (crime), you cannot convert a
crime into a source of profit". It is observed in Sudhindra Kumar v. Ganesh
Chandra, that no court of law can countenance or give effect to a n agreement
which attempts to take the administration of law out of the hands of the judges
and put it in the hands of private individuals. For example, A knowing that B
%as committed a murder, obtains a promise from B to pay him (A) Rs. 1,00,000
in consideration of not exposing B. This is a case of stifling prosecution and the
agreement is illegal and void.

3 Contracts in the nature of champerty and maintenance: In England agreement

of 'maintenance' and 'champerty' are void on the ground of their being opposed
to public policy. 'Maintenance' means the promotion of litigation in which a
person has no interest of his own. In other words, where a person agrees to
maintain a suit, in which he has no interest, the proceeding is known as
Maintenance. Thus, maintenance tends to encourage speculative litigation.
'Champerty' is a bargain whereby one party is to assist another in recovering
property and, in turn, is t o share in the process of the action. Under English
Law, both of these agreements are declared illegal and void. Indian Law
is different. In Raja Venkata Subhadrayamma Guru v. Sree Pus~pathi
Venkatapathi Raju, the Privy Council held that champerty and maintenance are
not illegal in India, and that Csurts will refuse to enforce such agreements only
when they are found to be extortionate and unconscionable and not made with
the bonafide object of assisting the claims of the person unable to carry on
litigation himself. I n other words, only those agreements which appear to be
made for purposes of gambling in litigation and for injuring or oppressing
others, by encouraging unholy litigation, will not be enforced, but not all
agreements of champerty or maintenance. Thus, an agreement to render services
for the conduct of litigation in cdsideration of payment of 50 per cent of the
amount recovered through Court would be legally enforceable. But, where it was
found that the value of the part of the estate promised to be conveyed amounted
to Rs. 64,000 in return for Rs. 12,000 which was to be spent by the financier on
the prosecution of a n appeal in the Privy Council, it was held that although the
agreement was bonaji'de, it could not be enforced, the reward being extortionate
and unconscionable.
I
4 Agreements for the sale of p"blic oflFiees and titles: Traffic by way of sale in
, pub'lic offices and appointme!lts obviously tends to the prejudice of the public
sexvice by interfer'ing with the'selection of the best qualified persons. Such sales
I
are; therefore; unlawful and void.
%.sera1 Law of Contracts 11 Examples
1 A promises to pay B Rs. 5,000 if B secures him an employment in the public
service. The agreement is void.
2 Similarly, where A promises to pay a sum to B in order to induce him to
retire so as to provide room for A's appointment to the public office held by
B, the agreement is void (Saminatha v. Muthusarni).
~ f i e r n e n t sin restraint of parental rights. According to law, the father is the
guardian of his minor child. After the father, the right of guardianship vests in
the mother. This right cannot be bartered away by any agreement. Thus the
authority of a father cannot be alienated irrevocably and any agreement
purporting to do so is void. For example, a father having two minor sons agreed
to transfer their guardianship in favour of Mrs. Annie Besant and also agreed
not to revoke the transfer. Subsequently. he filed a suit for recovery of the boys
and a declaration that he was the rjghtful guardian, the court held that he had
the right to revoke his authority and get back the children (Giddn Narayanish v.
Mrs. Annie Besant).
Agreements in restraint of marriage: Under Section 26, every agreement in
restraint of the marriage of any person other than a minor is void.(You will
study it in detail in Unir 6).
Marriage brokerage or brokage contracts. A marriage brokerage contract is one
in which, in consideration of marriage, one or the other of the parties to it, or
their parents or third parties receive a certain sum of money. Accordingly, dowry
is a marriage brokerage and hence unlawful and void.

In the case of Venkatakrishna v. Venkatachalam, a sum of money was agreed to

be paid to the father in consideration.of his giving his daughter in marriage.
Held, such a promise amounted to a marriage brokerage contract and was void.
Similarly, where a purohit was promised a certain sum of money in
consideration of procuring a second wife for the defendant, it was held that the
promise was opposed to public policy and, thus, void (Vaithvanathan v.
Gangaraju).
In the above case, if marriage had been performed and the money remains
unpaid, it cannot be recovered in a Court of Law. But, if the money had been
paid and marriage also performed, the money cannot be got back.
8 Agreements in restraint of legal p ~ c e e d i n g:s Section 28 specifies two kinds of
agreements as void: (i) a n agreement by which a party is restricted absolutely
from enforcing his legal rights arising under a contract by the usual legal
proceedings in the ord,inary tribunals, and (ii) an agreement which limits the time
within which the contractual rights may be enforced. It is discussed in more .
detail in Unit 6.
I

9 Agreemmts interfering with course of justice: Any agreement for the purpose o;
t o the effect of using improper influence of any kind with judges or officers of
justice is void. (

10 Agreements in restraint of trade: 1n India, agreements in restraint of trade,

whether the restraint is total or partial, are declared void under Section 27.
These have been discussed in detail in Unit 6.
11 Agreements tending to create monopolies: Being opposed to public interest, the
contracts tending to create monopolies are void. For example, in District Board
of Jhelum v. Harichand a local body granted a monopoly to A to sell vegetables
in a particular locality. Held, the agreement was void.
Agreement in restraint of personal liberty: Agreements which unduly restrict the
personal frqedom of persons are void and illegal being against-pubfie policy. For
example, X, the debtor, borrowed money from Y, the money lender, on the
promise that he would not, without his written consent, leave his job, borrow
money, dispose of his property or change his residence. Held, the agreement
was void and illegal as.it restricted the personpl freedom of X (Harwood V.
Miller's Timber and Trading Co.)
 Consideration and Legallty
, Check Your Progress C of object

I A promises t ~pay
. his lawyer a fee of Rs. 5,000 if he wins the suit and also
promises to transfer to him part of the property in dispute. Can the lawyer
recover the promised fee and also claims share in the property?

2 A promises to pay Rs. 1,000 per month to a married womanB, in consideration

of B living in adultery with A and acting as his house-keeper. Can B lawfully
recover the amount, if A later refuses to pay her?

5.9 LET US SUM LTP

Consideration (the quid pro quo), is an essential element to make a contract valid
and enforceable. Consideration to be valid must not only be supplied at the desire of
the promisor but also should be real and legal. It need not, however, necessarily be
supplied by the promisee or be adequate.
I

?
Section 25 which declares a contract without consideration as no contract also
recognises certain exceptions whereunder in spite of there being no consideration
contract shall be valid and enforceable. Section 185 further adds to the list of these
exceptions. Thus, the contracts without consideration are valid in the following
cases :
i) agreements which are the result of natural love and affection between parties
standing in a near relationship, if the agreement is written and registered,
/ ii) a promise to compensate for something voluntarily,
I
i iii) a promise to pay a time-barred debt
1 iv) .c~mpletedgifts (i.e., gifts offered and accepted) are valid, but a promise to gift
iI cannot be enforced, and
v) contracts of agency.
I
The consideration or object of a contract shall be unlawful where: i) it is forbidden
by law, ii) if permitted would defeat the provisions of any law, iii) it is fraudulent,
iv) it involves or implies injury t o the person or property of another, and v) the court
regards it as immoral, or opposed to public policy.
1 What agreements shall be construed against public policy is not definzd anywhere in
I
the Act. On analysis of judicial pronouncements, such agreements may be said to
1 include: (I) trading with enemy, (2) agreements for stifling prosecution,
I
i (3) champerky and maintenance contracts, (4) agreements for sale of public offices
'and titles, (5) agreements in restraint of parental rights, (6) marriage brokerage or
brocage contracts, (7) agreemeits interfering with course of justice, ,
1
I
(8) agreements to create monopolies, (9) agreement in restraint of trade. (101 agreements
in restraint of marriage, (1 1) agreement in restraint of personal liberty, and
(12) agreement in restraint of legal proceedings.
<
.

5.10 KEY WORDS

Detriment: I t connotes a meaning similar to loss. In particular, it means damage or
i injury t o one's interest.
1 Maintenance and Champerty : These two expressions are normally used together in
! law. 'Maintenance' means the promotion of litigation in which a person has nn
I
 interest of his own. 'Champerty*, on the other hand, is a bargain whereby one party.,
is to assist another in recovering property and in turn is to share in the proceeds of 4

the action.
, Quid-pro-quo: This iatin expression means 'something in return'.
Stifling Prosecution : Withholding information which may lead to the prosecution of
another. The intention is t o make a personal gain/ bargain.
Stranger to Consideration : A person who is a party to the contract but has not
supplied the consideration himself. Instead, the consideration is supplied for him by
some other person.
Stranger t o Contract: A person who is not a party to the $ontract.

4 5.11 ANSWERS TO CHECK YOUR PROGRESS

A ' 1 Consideration is the price for which the promise of the other is bought.
2 'Quid-pro-quo' is a latin expression meaning !something in return'
3 The promisor
4 Yes
5 Yes
6 i) must, the promisor
ii) adequate, value
iii) void-ab-initio-(nudum pactum)
7 i) ~ a l s eii)
' False iii) False iv) True v) True vi) False vii) True
B 1 i) False ii) False iii) True iv)True v) False
2 i) No. Consideration is unlawful (Sec. 23)
ii) Consideration is unlawful
3 No. Section 23, unlawful object. Involves injury to the person or property of
'
another. Similar decision was given in Gherulal Parekh v. Mahadeo.
C 1 Lawyer can recover the promised fee but not share in the property. Read the
discussion on Champerty and Maintenance.
2 No, the agreement being for an immoral act is against public policy and thus
void (Section 23).

5.12 TERMINAL QUESTIONS

1 Define 'Consideration'. Discuss various types of consideratioris.
2 Do you agree with the view 'No Consideration, No Contract?
3 In what cases a contract without consideration is not valid.
4 Discuss the rule that a stranger to a contract cannot sue o n the contract. Are
there any exceptions t o this rule?
5 'A.stranger to contract cannot sue, but a stranger t o consideration can sue'. D o
you agree?
6 "Insufficiency of consideration is immaterial, but a valid contract must be
supported by lawful and real consideration." Comment,,
7 Under what circumstances is the object o r consideration of a contract deemed
I

16- unlawful? Illustrate with examples.

 8 Discuss the doctrine of public policy. Give examples of agreements that are Consideration and Legality
considered opposed to public policy. of object.

\
..
. Note: These questions will help you to understand the unit better. Try to write answers
1 for them. But do not submit your answers to the University. These are for your practice
I only.