Question

Principle: The consideration or object of an agreement is unlawful if it is forbidden by law. Every agreement of which the object or consideration is unlawful is void.
Facts: 'X' promises to pay 'Y' $Rs.50000$, if he ('Y') commits a crime, 'X' further promises to indemnify him ('Y') against any liability arising thereof. 'Y' agrees to act as per X's promise.
Which of the following derivations is correct?

• A. There is a contract between 'X' and 'Y'
• B. There is an agreement between 'X' and 'Y' which can be enforced by the court of law
• C. There is an agreement between 'X' and 'Y' which cannot be enforced by the court of law
• D. There is a voidable contract between 'X' and 'Y'

Answer 1

Answer: (C)

There is an agreement between 'X' and 'Y' which cannot be enforced by the court of law

Section $23$ of the Indian Contract Act $1872$, states that the consideration or object of an agreement is lawful, unless It is forbidden by law; or is of such nature that, if permitted it would defeat the provisions of any law or is fraudulent, of invalnes or implies, injury to the person or property of another, or the court regards it as immoral or opposed to public policy.
In the present scenario, X promises to pay Y $Rs.50000$ if he (Y) commits a crime. Here both the object and consideration are unlawful and forbidden by law, So, the agreement between X and Y cannot be enforced by the court of Law.