Question

Legal Principle: A right of action cannot arise out of an illegal activity.
Factual Situation: A promises to obtain for B an employment in the public service and B promises to pay Rs.1,000 to A.
Issue: What is the nature of the contract?

• A. It is a valid contract.
• B. The agreement is void as the consideration for it is unlawful.
• C. It is a voidable contract.
• D. None of these.

Answer 1

The correct option is B The agreement is void as the consideration for it is unlawful.

Any agreements which are recognised by law are lawful agreements and hence become contracts. An agreement has three basic ingredients- offer, acceptance and consideration.

The content of the consideration as per section 23 of the Indian Contract Act, 1872 should be lawful and any consideration made out must not be forbidden by law, or defeat any provisions of law or is fraudulent in nature or it is immoral and against public policy. Hence, in the present case, the agreement is void as consideration is unlawful in nature.