Legality of Object, Void Agreements & Contingent Contracts — KSLU Contract I Notes

Legality of Object, Public Policy & Void Agreements

The law will not lend its courts to help you enforce a bribe, a bet, or a promise never to work again. Some agreements are struck down not because consent was lacking but because their object offends the law or society. Knowing exactly which agreements the Act declares void is worth a whole essay most years.

Objects the law will not back

A. Unlawful object & consideration — Section 23.

An agreement is void if its object or consideration is unlawful — i.e. it is forbidden by law, would defeat the provisions of any law, is fraudulent, involves injury to person or property, or the court regards it as immoral or opposed to public policy.

B. Doctrine of public policy.

Public policy is the principle that no one may lawfully do what tends to harm the public good. The recognised heads include: trading with an enemy, agreements to stifle a prosecution, maintenance and champerty, agreements in restraint of legal proceedings, marriage, trade, or parental rights, and agreements to traffic in public offices. Courts are cautious about extending public policy (“an unruly horse”), applying only the established heads.

C. Expressly void agreements (ss.24–30).

The Act itself declares several agreements void, whatever the parties intend:

Restraint of marriage (s.26) — an agreement restraining the marriage of any person (other than a minor) is void.
Restraint of trade (s.27) — every agreement restraining a person from exercising a lawful profession, trade or business is void to that extent — except (a) sale of goodwill (reasonable local limits), and (b) statutory exceptions (e.g. partners’ agreements under the Partnership Act).
Restraint of legal proceedings (s.28) — void, with saving for arbitration agreements.
Uncertain agreements (s.29) — agreements whose meaning is not certain, or capable of being made certain, are void.
Wagering agreements (s.30) — agreements by way of wager (a bet on an uncertain event, each party standing to win or lose, with no other interest) are void; nothing can be recovered on them. (A wager is distinguished from insurance, which requires an insurable interest.)

🧩 WORKED EXAMPLE — a promise to procure a job.

Facts. A promises to obtain B a government post; B promises to pay A ₹5 lakh. B does not pay; A sues.

Rule. An agreement to procure a public office/employment for money is opposed to public policy and therefore void (s.23).

Apply. The object — trafficking in a public post — offends public policy; the agreement is void and unenforceable.

Conclusion. A cannot recover; the agreement is void.

Section 27, Indian Contract Act, 1872: “Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.”

In Simple Terms: the law will not enforce agreements whose purpose is unlawful, against public good, a bare bet, hopelessly vague, or that shut a person out of earning a living.

flowchart TD
    VOID["Agreements the Act declares VOID"]
    VOID --> S23["Unlawful object/consideration (s.23) + public policy"]
    VOID --> S26["Restraint of marriage (s.26)"]
    VOID --> S27["Restraint of trade (s.27) — except sale of goodwill, partnership"]
    VOID --> S28["Restraint of legal proceedings (s.28) — except arbitration"]
    VOID --> S29["Uncertain agreements (s.29)"]
    VOID --> S30["Wagering agreements (s.30)"]

Case Laws

Madhub Chunder v Rajcoomar Doss (1874) — s.27 strikes down all restraints of trade, whether partial or total, unless within an exception.
Gherulal Parakh v Mahadeodas (1959) — a wagering agreement is void but not unlawful; collateral transactions are not necessarily void.

Contingent Contracts

“I’ll pay you ₹1 lakh if my ship returns from London.” That “if” makes it a contingent contract — real and enforceable, yet dependent on an uncertain future event. Students constantly confuse it with a wager, so the distinction is a reliable source of marks.

A contract that hangs on an “if”

A contingent contract (s.31) is a contract to do or not do something if some event, collateral to the contract, does or does not happen. A contract of insurance, indemnity or guarantee is a common example.

A. Rules of enforcement (ss.32–36).

s.32 — contingent on an event happening: enforceable only when the event happens; void if the event becomes impossible.
s.33 — contingent on an event not happening: enforceable when the event becomes impossible.
s.34 — where the event is the future conduct of a living person, it is treated as impossible if that person does anything making it impossible within a definite time.
s.35 — contingent on an event happening within a fixed time (void if the time expires) / not happening within a fixed time (enforceable when the time expires).
s.36 — agreements contingent on an impossible event are void, whether or not the parties knew of the impossibility.

B. Contingent contract vs wager.

In a wager the uncertain event is the sole determinant and the parties have no other interest; in a contingent contract the event is collateral and the parties have a real interest in performance.
A wager is void (s.30); a contingent contract is valid.
In a wager the parties reciprocally promise to pay on the event’s outcome; in a contingent contract one party promises to perform on the event.

Section 31, Indian Contract Act, 1872: “A ‘contingent contract’ is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.”

In Simple Terms: a contingent contract is a genuine deal that only springs into performance if a stated uncertain event occurs — unlike a wager, the parties have a real stake beyond the bet itself.

flowchart TD
    CC["Contingent contract (s.31): perform IF a collateral event happens/doesn't"]
    CC --> R1["Event happens (s.32) / not happens (s.33)"]
    CC --> R2["Within fixed time (s.35); impossible event = void (s.36)"]
    CC --> W["vs WAGER (s.30): event is the sole subject, no other interest = VOID"]

Case Laws

Gherulal Parakh v Mahadeodas (1959) — clarifies the wager/contingent distinction; wagers are void but their collateral contracts may stand.

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