Example 1: A promises B to drop a charge he has brought against B for theft, while B promises to revive the value of the items taken away. The agreement is cancelled because its purpose is illegal. (i) an agreement or contract is void where its purpose is to be unlawfully infringed; 3. In Re: K.L. Gauba (23.04.1954 – BOMHC) [AIR 1954 Bom 478]. paragraph 11: “. The freedom of the citizen, as well as the freedom of the lawyer to enter into a contract, are always governed by considerations of public order, as discussed on page 23 of the Indian Contract Act. That freedom is also subject to the other considerations on p. 23. 11. the form of the agreement and the agreement of the parties suspend the law If the object or recital of an agreement is contrary to moral mores, it is annulled. the examples below would help to better understand the purpose. Example 1: A, a landlord, rents his house to B, an advertising worker, knowing that it could be used for an immoral business.
the landlord cannot recover the rent. Here the matter is immoral, the agreement to pay the rent is reckless. 17. The relevant illustrations in Section 23: (e) A, B and C conclude an agreement on the distribution among them of the profits which they have acquired or are to be acquired through fraud. The agreement is cancelled because its purpose is illegal. (g) A, who is an agent of a landowner, undertakes to receive, for money, without the knowledge of his client, a lease of land belonging to his principal. The agreement between A and B is inconclusive, as it involves fraud by concealing A from its sponsor. 2. .