Understanding Lawful Consideration and Public Policy in Contracts
Lawful consideration and public policy play vital roles in determining the validity of agreements. According to Section 23 and Section 24 of contract law, consideration and object must be lawful, and agreements are void if they involve unlawful elements. Public policy considerations guide the judiciary in assessing agreements for alignment with societal interests. Examples like trading with enemy aliens and interference in justice administration highlight scenarios contravening public policy.
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Lawful Consideration and Lawful Object (S.23) Consideration or object of an agreement is lawful, unless: It is forbidden by law, or It is of such a nature that, if permitted, it would defeat the provisions of any law, or (Nandlal v Thomas J William) It is fraudulent, or It involves or implies injury to the person or property of another, or The court regards it as immoral or opposed to public policy Samiuddin, Contract Law I Every agreement of which the object or consideration is unlawful is void. Based on maxim Ex turpi causa non oritur actio.
Public Policy An agreement is unlawful if the court regards it as opposed to public policy. Richardson v Mellish, Burrough J; Public Policy is an unruly horse. State of Rajasthan v Govind Nahata Judiciary to decide what is public policy Gherulal Parekh v Mahadeodas Maiya, Subba Rao J; public policy should only be invoked in clear and incontestable cases of harm to the public. Ratan Chand Hira Chand v Asghar Nawab twin touchstone of public policy are Advancement of public good Prevention of public mischief Samiuddin, Contract Law I
Examples of Public Policy Trading with enemy alien Trafficking in public office (Parkinson v College of Ambulance, Mahendra Kumar Nandy v Ashwini Kumar) Interference in administration of justice --- withdrawal of criminal prosecution (except S. 320 CrPC and chapter 21A CrPC) Sati Bhagwandas Shashtri v. Raja Ram --- Maintenance and Champerty Ramswaroop v Court of Wards Ramkumar Kundu v Chndra Kanto --- Marriage Brokerage Contract Samiuddin, Contract Law I
Section 24 Agreements void, if considerations and objects unlawful in part. If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. Samiuddin, Contract Law I
