PPT - Consideration of Contract & Legality of Object | Business Law - B Com PDF Download

 Page 1


LEGALITY OF OBJECT 
AND 
CONSIDERATION
Page 2


LEGALITY OF OBJECT 
AND 
CONSIDERATION
Introduction 
? If an agreement is to be enforced in a 
court of law, both consideration and 
object of the agreement must be 
lawful. 
? When one of consideration or object 
is unlawful, the contract is void. 
Page 3


LEGALITY OF OBJECT 
AND 
CONSIDERATION
Introduction 
? If an agreement is to be enforced in a 
court of law, both consideration and 
object of the agreement must be 
lawful. 
? When one of consideration or object 
is unlawful, the contract is void. 
? In order to constitute a valid contract, both 
consideration as well as object must be lawful; 
otherwise would be void. 
? According to section 23 “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 
unlawful is void”. 
Page 4


LEGALITY OF OBJECT 
AND 
CONSIDERATION
Introduction 
? If an agreement is to be enforced in a 
court of law, both consideration and 
object of the agreement must be 
lawful. 
? When one of consideration or object 
is unlawful, the contract is void. 
? In order to constitute a valid contract, both 
consideration as well as object must be lawful; 
otherwise would be void. 
? According to section 23 “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 
unlawful is void”. 
CONSIDERATION
? Section 2(d) of the Indian Contract Act 
defines consideration as when at the desire 
of the promisor, the promise or any other 
person has done or abstained from doing, or 
does or abstains from doing, or promises to 
do or to abstain from doing something, such 
act or abstinence or promise is described a 
consideration for the promise. 
? Example:  A agrees to sell his home to B for 
Rs. 10, 00,000. Here B's promise to pay Rs. 
10, 00,000 is the consideration for A's 
promise to sell the home and A's to sell the 
home is the consideration for B’s promise to 
pay Rs. 10, 00,000. 
Page 5


LEGALITY OF OBJECT 
AND 
CONSIDERATION
Introduction 
? If an agreement is to be enforced in a 
court of law, both consideration and 
object of the agreement must be 
lawful. 
? When one of consideration or object 
is unlawful, the contract is void. 
? In order to constitute a valid contract, both 
consideration as well as object must be lawful; 
otherwise would be void. 
? According to section 23 “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 
unlawful is void”. 
CONSIDERATION
? Section 2(d) of the Indian Contract Act 
defines consideration as when at the desire 
of the promisor, the promise or any other 
person has done or abstained from doing, or 
does or abstains from doing, or promises to 
do or to abstain from doing something, such 
act or abstinence or promise is described a 
consideration for the promise. 
? Example:  A agrees to sell his home to B for 
Rs. 10, 00,000. Here B's promise to pay Rs. 
10, 00,000 is the consideration for A's 
promise to sell the home and A's to sell the 
home is the consideration for B’s promise to 
pay Rs. 10, 00,000. 
When Consideration or Object 
is Unlawful
If it is forbidden by law:
Law forbids an act for various reasons.
If the consideration or the object of an 
agreement
is doing of such an act which is forbidden by 
law,
the agreement is void. 
Example: A promises B to drop a
prosecution which he has instituted against
B for robbery, & B promise to restore the
value of the things taken. The agreement is
void, as its object is unlawful.