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Question

Which of the following agreement is not an agreement opposed to public policy?


A
Trading with enemy
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B
Stifling prosecution
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C
Restraint of trade
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D
Insurance contract
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Solution

The correct option is D Insurance contract
As per section 23 of the act, those contracts, considerations or objects of which are unlawful i.e. illegal or immoral or forbidden by law or opposed to public policy are void in nature. The Act does not anywhere define the expressions "public policy" or "opposed to public policy" or "contrary to public policy". However, the term "public policy" could plainly mean issues concerning the public or public benefit and the interest of public at large. Over the years the courts have developed the meaning of the term 'opposed to public policy'. It contain agreements such as:
  • Trading with Enemies: All trade with enemies is against public policy. Thus it is unlawful and is void. However, if a contract is made during peace times and later on war breaks out, one of the two things may result, Either the contract is suspended or it stands dissolved depending upon the intention of the parties to contract.
  • Stifling Prosecution: An agreement in which one party agrees to drop criminal proceedings pending in a court in consideration of some amount of money, is unlawful. Therefore, such an agreement cannot be enforced except where crime is compoundable.
  • Agreement to Commit a Crime: If in an agreement, the consideration is committing a crime, the agreement is opposed to public policy and is void. Similarly, an agreement to indemnify a person against consequences of his criminal act is unenforceable being opposed to public policy. 
  • Agreements in Restraint of Legal Proceedings: agreements which prohibits wholly or partly any party to the agreement to enforce his rights in respect of any contract is void to that extent. If an agreement curtails the period of limitation which is prescribed by the law of limitation is void. This is so because, its object is to defeat the provisions of law.

Legal Studies

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