Chapter 7

Legality of object and

consideration
Meaning and concept
• Legality of object and consideration is one of the most important elements for
forming a valid contract. So, the legality of the object and consideration for a
contract means the contract must be lawful. An agreement having lawful object
and consideration, but they are not lawful, does not amount to a contract.
• Object here means design or purpose and consideration means something in
return. But only the existence of the object and consideration in the contract is
not enough. For enforceability, the lawful object and consideration are
necessary in the agreement.
Examples: A promise to support food, clothes etc. to C, a child of B and B
promises to pay A NPR 10,000 per month for the purpose. Here, each party’s
promise is the consideration for the other party, and they are lawful.
A, B and C agree on the division among them of gains acquired by them by fraud.
The agreement is void, as the object of it is unlawful.
Importance of legality of object and
consideration
• It saves the time and effort of the court from engaging in such
unintended dealings.
• It brings certainty by the imposition of various conditions where the
remedy is not available even to the injured party, so, a person may
remain far from such dealings.
• The court should not be a means to enforce rights in unlawful
transactions.
• It helps to keep good morals in a society or state.
Unlawful (Illegal) agreement and its
conditions:
Any transaction or act prohibited by the law of the land either directly or indirectly
is known as an unlawful act. The transaction or act forbidden directly by law is
illegal. When any agreement is made with an object or for consideration to do an
act or to cause it to be done, the object or consideration of which is unlawful, the
agreement is void.
The following conditions the object or consideration of an agreement is deemed to
be unlawful:
1) Object or consideration forbidden by law: If the object or consideration of an
agreement is to do an act forbidden by law the agreement is unlawful and void.
Example: A agrees to pay NPR to B, if B promises to murder C. B promises to do so.
The agreement is void as the consideration for the promise of A to pay the amount
to B is to kill C, which is forbidden by law.
2) Object or consideration defeating the provision of any law:
Sometimes the object or consideration of an agreement is not directly
forbidden by the law of the land, but if permitted, it would defeat the
provision of any land. In such cases, an agreement is unlawful and void.
Example: A lets B a flat at a rent of NPR 12,000 per month. To reduce the
municipal tax, A made two agreements with B. In one agreement the rent
is stated to be NPR 10,000 and in the other agreement, it is provided to be
NPR 8,000. Held, this agreement is a device to evade taxes and is
therefore unlawful.
3) Fraudulent Object: An agreement the object of which is fraudulent is
void.
Example: 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 its
object is unlawful.
4) Immoral object or consideration: The agreement having an immoral
object or consideration is unlawful and void.
Example: A gave a sum of money to B, a married woman, to obtain a
divorce from her husband. A agreed to marry her as soon as she obtains a
divorce. Held, A was not entitled to recover the amount because the
agreement was void as its object was immoral.
5) Object or consideration opposed to public policy: The agreement
concluded against public policy or the welfare or interest of the public is
void.
Example: This category includes several agreements such as trading with
alien enemies, restraint of trade or marriage etc.
6) Object or consideration injuring to person or property: If the object
or consideration of an agreement is to injure a person or property of
another, the agreement is unlawful. In such a case, the agreement is
void.
Example: A borrowed a sum of a hundred rupees from B and executed
a bond promising to work for B without pay for a period of two years.
After two years, A was to return the principal sum. It was agreed that if
A failed to pay back after two years, he would be to pay excessive
interest and the principal sum. Held, the agreement between A and B
was void because it involved injury to A.
Void agreement and its
conditions
An agreement, the legal status of which is null without validity, is called
a void agreement. A void agreement is a mere agreement and does not
come within the definition of contract and it cannot be enforced by law
because such agreement is void.
The following are the conditions of void agreement:
1) Agreement having an unlawful object
2) Agreement by bilateral mistake of fact
3) Agreement without consideration
4) Agreement with/by incompetent parties.
5) Agreement in restraint of public facility: If an agreement is concluded to restrain anyone
from enjoying such facilities, the agreement is void.
6) Agreement in restraint of legal proceedings: Nobody can prevent another from exercising
his/her legal right. If an agreement is made that seeks to restrict the legal rights of any
person from being enforced by the Government office or court, the agreement is void.
7) Agreement to do impossible acts: In an agreement if the fact of which cannot be
performed by human beings is made, the agreement cannot be valid and it becomes void.
8) Agreement contingent on the impossible event: An agreement contingent on the
impossible event is void.
Example: A agrees to pay B a sum of NPR 2,000 if B will marry C, A’s daughter. C was dead at
the time of the agreement. This agreement is void.
9) Wagering agreement*: A wagering agreement has also been declared void.

*A wagering contract, often called a "betting contract," is an agreement between two

parties where each party stands to win or lose something of value, usually money, based on
the outcome of an uncertain event.
Example: Two friends, X and Y, agree to bet on the outcome of a football match between Team A and Team B. X
bets 10,000 on Team A winning, while Y bets 10,000 on Team B winning. The outcome of the match will
determine who wins the wagered amount.
Questions:
1) What are the significances of the legality of the object of contract?
2) What types of agreements are regarded as void on the grounds of
their validity?
3) What is the void agreement? Explain the contracts that are declared
as expressly void.
4) When the object and consideration of an agreement are said to be
unlawful? Illustrate with an example.