Section 23 of Indian Contract Act

23. What considerations and objects are lawful, and what not.— 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 said to be unlawful. Every agreement of which the object or consideration is unlawful is void.

Illustrations

(a) A agrees to sell his house to B for 10,000 rupees. Here B’s promise to pay the sum of 10,000 rupees is the consideration for A’s promise to sell the house, and A’s promise to sell the house is the consideration for B’s promise to pay the 10,000 rupees. These are lawful considerations.

(b) A promises to pay B 1,000 rupees at the end of six months, if C, who owes that sum to B, fails to pay it. B promises to grant time to C accordingly. Here, the promise of each party is the consideration for the promise of the other party, and they are lawful considerations.

(c) A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here, A’s promise is the consideration for B’s payment and B’s payment is the consideration for A’s promise and these are lawful considerations.

(d) A promises to maintain B’s child, and B promises to pay A 1,000 rupees yearly for the purpose. Here, the promise of each party is the consideration for the promise of the other party. They are lawful considerations.

(e) 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.

(f) A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful.

(g) A, being 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 it implies a fraud by concealment, by A, on his principal.

(h) A promises B to drop a 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 object is unlawful.

(i) 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 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, as it renders the transaction, in effect, a purchase by the defaulter, and would so defeat the object of the law.

(j) A, who is B’s mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A. The agreement is void, because it is immoral.

(k) A agrees to let her daughter to hire to B for concubinage. The agreement is void, because it is immoral, though the letting may not be punishable under the Indian Penal Code (45 of 1860).

Final Thoughts

Introduction

Section 23 of the Indian Contract Act, 1872, is an important provision that defines what kind of considerations (or promises) and objects (purpose) in a contract are lawful or unlawful. The section helps in determining when a contract is valid or void based on the nature of its consideration or object.

Meaning of Consideration and Object

• Consideration: It means something in return, like a promise, act, or forbearance, which one party gives to the other in exchange for a contract.
• Object: It refers to the purpose or aim of the contract, why the parties are entering into the agreement.

In simple terms, consideration is “what is given” and object is “why it is given.”

What is Lawful Consideration and Object?

The consideration or object of an agreement is lawful if it is not forbidden by law and does not go against public interest or morality. Essentially, the contract should not ask the parties to do anything illegal, harmful, or immoral.

Circumstances Making Consideration or Object Unlawful

According to Section 23, the consideration or object of an agreement is unlawful if:

• It is forbidden by law: The agreement involves doing something that the law does not allow.
• It defeats the provisions of any law: The agreement’s purpose undermines or violates any existing legal rules.
• It is fraudulent: The contract is made with the intent to deceive or cheat someone.
• It involves injury to person or property: The agreement causes harm to another’s body or belongings.
• It is immoral or opposed to public policy: The contract goes against social morality or the interest of the public.

If any of these apply, the agreement’s consideration or object is unlawful.

Legal Effect of Unlawful Consideration or Object

When the consideration or object of a contract is unlawful, the entire agreement becomes void. This means:

• The contract has no legal force.
• Neither party can enforce the contract in a court of law.
• The law will not protect or assist the parties in carrying out such contracts.

Illustrations Explaining Section 23

The Act provides many examples to clarify lawful and unlawful considerations:

• (a) Lawful consideration: A sells his house to B for Rs. 10,000. Both promises (sale and payment) are lawful.
• (b) Lawful consideration: A promises to pay B if C fails to pay B. B agrees to give time to C. Both promises support each other and are lawful.
• (c) Lawful consideration: A agrees to compensate B if B’s ship is wrecked on a voyage, in return for a sum from B. Both sides have lawful promises.
• (d) Lawful consideration: A promises to maintain B’s child, and B pays A annually. Both promises are lawful.
• (e) Unlawful object: A, B, and C agree to share illegal gains by fraud. This agreement is void.
• (f) Unlawful consideration: A promises to get B a government job for Rs. 1,000. This is illegal and void.
• (g) Unlawful object: A, an agent, secretly agrees with B to get a lease of his principal’s land without the principal’s knowledge. This is fraud and void.
• (h) Unlawful object: A promises to drop a robbery case against B, and B agrees to pay back stolen goods. This agreement is void.
• (i) Unlawful object: A’s land is sold for revenue arrears; B buys it and agrees to give it back to A, who is not allowed by law to buy. The agreement is void.
• (j) Unlawful object: A, a person with influence over B, promises to use his influence for C’s benefit for Rs. 1,000. The contract is immoral and void.
• (k) Unlawful object: A lets her daughter for concubinage to B. This immoral agreement is void, even if not directly punishable under the Indian Penal Code.

Conclusion

Section 23 of the Indian Contract Act is essential for ensuring contracts are made with lawful and ethical intentions. It protects society by invalidating agreements that are illegal, fraudulent, harmful, or immoral. Any contract with unlawful consideration or object is void and cannot be enforced by law.

This provision upholds justice and public interest in contract law, making sure contracts contribute positively to social and legal order.