Void Agreements under the Law of Contract

Updated: Jul 28, 2021

INTRODUCTION

Void Agreements under the Law of Contract

A Contract is said to be void when it does not fulfill all the essential conditions under Section 10 of the Indian Contract Act, 1872. There are mainly 5 essentials that have to be fulfilled to make a contract valid.


Section 23 of the Indian Contract Act, 1872 provides that every agreement of which the consideration or object is deemed unlawful shall be considered void in the eyes of law.


(a) It is forbidden by law


Here law would also include the rules regulations, notifications and the like that are issued under the powers granted by a statute to an authority.

ILLUSTRATION:- X sold imported foreign goods without a license to B. The sale is unlawful as the sale of liquor without a license is forbidden by the law, i.e., The Excise Act. This renders A unable to enforce the payment of such goods.


(b) If it defeats the Provisions of any Law, but not directly prohibited by any Law


ILLUSTRATION:- A’s estate is sold for arrears of revenue. Under the provision, the defaulter is prohibited from purchasing the state. 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.


(c) If it is Fraudulent


ILLUSTRATION:- Object or consideration of an agreement is fraudulent. An agreement with such an object or consideration is unlawful and void.


(d) If it involves or Implies injury to a person or property of another.


ILLUSTRATION:- Where it creates injury to a person or the property of another. An agreement with such an object or consideration is unlawful and void.


(e) If the court regards it as immoral.


ILLUSTRATION:- X gave Rs. 10,000 to Y a married woman to obtain a divorce from her husband. X agrees to marry when divorce has been taken. X would not recover the amount.


The following categories of agreements are considered Void agreements provided under Chapter II of the Indian Contract Act, 1872-


Void Agreements under the Law of Contract

1. WITH UNLAWFUL OBJECT OR CONSIDERATION


Section 24 of the Indian Contract Act, 1872 delineates the instance where only a part of the consideration or the object has been rendered unlawful.


Section 24 follows the general principle laid down in Section 23, which provides, which lays down various objects and considerations, which are either lawful or unlawful and determine the validity of the contract.


When any part of a single consideration for one or more objects or any part of any one of the several considerations for a single object is deemed unlawful, the resulting agreement shall be considered void.


When there are two sets of distinct promises, and when the void part of the agreement or contract, can be perfectly and properly separated from the rest (unlawful part), the former lawful part does not become invalid and can be enforced as a valid contract.


CASE LAW- Alice Mary Hill v William Clarke

In this case, the plaintiff (Hill) a married woman had agreed to live in adultery with the defendant as well as serve him as the housekeeper.

In return, the defendant had agreed to pay the plaintiff a consolidated remuneration (payment) of 50 Dollars per month.


In this instance, the Court held that the lawful part of the agreement cannot be separated from the unlawful part as the entire agreement was rendered void.

The plaintiff was unable to recover any form of compensation, even for the service she provided as a housekeeper.


GENERAL OBSERVATION- If the agreement between the two parties in the instant case had a stipulated payment of 30 Dollars for housekeeping and another 20 Dollars for living in adultery, then the plaintiff would have been able to enforce the payment of her housekeeping services, as it was valid and could be separated from the unlawful part of the contract.



Void Agreements under the Law of Contract

2. AGREEMENTS IN RESTRAINT OF MARRIAGE under Section 26


As per Section 26 of the Indian Contract Act, 1872, any agreement which causes or results in some sort of restraint in the nuptial proceedings of another individual, other than a minor, then such an agreement shall be deemed void.

In simpler words, such agreements or contracts, which are restraining an adult's freedom of choosing a partner for marriage are against public policy and are considered void.


CASE LAW- Lowe v. Peers

In this case, the defendant (Peers) had promised the plaintiff (Mrs Lowe) that he would not marry any other person, other than the plaintiff and also promised to pay an amount of 200 pounds if the promise was not fulfilled.

The agreement was rendered void as it stood against the public policy of laws.

CASE LAW- Lafatunissa v. Shaharbanu<