Lawful Consideration and Lawful Object
1. Lawful Consideration
Definition:
Consideration is something of value given by one party to the other to support a contract.
Under Indian Contract Act, 1872, Section 10, for a contract to be valid: consideration must be lawful.
Lawful consideration means the consideration must not be forbidden by law, immoral, or opposed to public policy.
Key Points:
Consideration must be real and not illusory.
It cannot be something illegal or immoral.
It must be possible to perform.
Examples of Lawful Consideration:
Payment of money for goods or services.
Promise to deliver goods in exchange for money.
Services rendered in return for something of value.
Examples of Unlawful Consideration:
Payment for committing a crime (illegal).
Consideration involving immoral acts.
Consideration prohibited by law.
Case Laws on Lawful Consideration:
Chinnaya vs Ramayya (1882) 4 Mad 177
Facts: A father promised to pay his son’s debts.
Held: Consideration was lawful because the act was not illegal.
Lalman Shukla vs Gauri Dutt (1913)
Facts: A reward was offered for finding a missing person. Someone found the person without knowing about the reward.
Held: No consideration, because the act was not done at the promisor’s request.
Shows that lawful consideration must also be requested by the promisor.
2. Lawful Object
Definition:
An object (purpose) of a contract is lawful if it is not forbidden by law, not fraudulent, not immoral, and not opposed to public policy.
Section 23 of Indian Contract Act, 1872:
“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 injury to the person or property, or is immoral, or opposed to public policy.”
Key Points:
Object must be legal → Cannot violate any law.
Object must not be fraudulent or immoral.
Object must not defeat public policy.
Examples of Lawful Object:
Buying and selling goods.
Leasing a property.
Services for remuneration.
Examples of Unlawful Object:
Agreement to commit murder.
Agreement to cheat the government.
Contract to defraud creditors.
Case Laws on Lawful Object:
Gherulal Parakh vs Mahadeodas Maiya (1959)
Facts: Contract involved commission for illegal purchase.
Held: Object was unlawful → Contract void.
Bharata Nidhi Ltd. vs. UOI (1965)
Facts: Contract involved illegal money-lending activity.
Held: Contract void due to unlawful object.
✅ Difference Between Lawful Consideration and Lawful Object:
| Aspect | Lawful Consideration | Lawful Object |
|---|---|---|
| Meaning | Something given in return for promise | Purpose or aim of the contract |
| Focus | What is exchanged | Why the contract is made |
| Lawful Requirement | Must not be illegal or immoral | Must not be illegal, immoral, or against public policy |
| Example | Payment for goods or services | Agreement to sell goods |
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