Lawful Object

Under the Indian Contract Act, 1872, for an agreement to become a valid contract, not only the consideration but also the object of the contract must be lawful. The object refers to the purpose or intention for which the agreement is entered into. If the object is unlawful, the agreement becomes void, irrespective of the legality of consideration or consent.

Meaning of Lawful Object

The object of a contract is the end or aim which the parties seek to achieve by entering into the agreement. An object is said to be lawful when it is not prohibited by law and does not violate legal or moral principles. According to Section 23 of the Indian Contract Act, an agreement is void if its object is unlawful.

When Object is Unlawful (Section 23)

The object of an agreement is considered unlawful in the following cases:

1. Object Forbidden by Law

An object is unlawful if it involves an act that is expressly prohibited by law. Agreements to commit crimes or illegal acts are void.

Example: An agreement to sell illegal drugs or to commit theft is void due to unlawful object.

2. Object Defeating the Provisions of Law

If the object of an agreement is to circumvent or defeat the provisions of any law, it is unlawful.

Example: An agreement to transfer property to avoid paying tax defeats the provisions of law and is void.

3. Fraudulent Object

An agreement with an object to defraud or deceive another person is unlawful.

Example: An agreement formed to cheat creditors or misrepresent facts for personal gain is void.

4. Object Involving Injury to Person or Property

If the object of an agreement involves causing injury or harm to any person or property, it is unlawful.

Example: An agreement to damage a competitor’s property for monetary benefit is void.

5. Immoral Object

An object is unlawful if it is immoral in the eyes of law. Agreements encouraging immoral or unethical acts are void.

Example: An agreement for illicit cohabitation or immoral services is unenforceable.

6. Object Opposed to Public Policy

An agreement whose object is against public policy is unlawful. Public policy aims to protect public welfare and social interest.
Examples include:

• Agreements restraining legal proceedings

• Agreements interfering with administration of justice

• Agreements promoting corruption or bribery

Effect of Unlawful Object

Under the Indian Contract Act, 1872, the object of a contract must be lawful to make the agreement valid and enforceable. According to Section 23, if the object of an agreement is unlawful, the agreement becomes void. The effect of an unlawful object is serious, as it destroys the legal validity of the contract and denies legal protection to the parties involved. The law discourages agreements that are illegal, immoral, or opposed to public policy by imposing strict consequences.

• Agreement Becomes Void Ab Initio

The primary effect of an unlawful object is that the agreement becomes void ab initio, meaning void from the very beginning. Such an agreement has no legal existence in the eyes of law and does not create any rights or obligations between the parties. Even if the parties willingly entered into the agreement and partly performed it, the law treats it as if it never existed. Courts refuse to recognize or enforce such agreements because they are based on illegal or prohibited purposes.

• No Legal Remedy Available to Parties

When the object of an agreement is unlawful, no legal remedy is available to either party. The courts follow the principle that they will not assist a party who bases his claim on an illegal agreement. Even if one party suffers loss or injustice, the court will not grant relief. This rule acts as a deterrent against entering into unlawful contracts and ensures that individuals do not seek judicial support for illegal activities.

• Collateral Transactions Also Become Void

An unlawful object not only affects the main agreement but also makes collateral transactions void, if they are connected to the unlawful object. Collateral agreements are those that are dependent on or closely related to the main contract. For example, if a loan is taken to carry out an illegal activity, both the main agreement and the loan agreement become void. This prevents indirect enforcement of unlawful contracts through related transactions.

• Money or Property Cannot Be Recovered

In case of an agreement with an unlawful object, money paid or property transferred cannot be recovered. The law follows the principle of in pari delicto, meaning both parties are equally at fault. Therefore, the court leaves the parties where it finds them. Even if one party has paid money or transferred property, recovery is not allowed, as it would indirectly support an illegal agreement.

• Contract Cannot Be Ratified or Validated

An agreement with an unlawful object cannot be ratified or validated, even with the consent of both parties. Unlike voidable contracts, which can be affirmed or rejected, agreements with unlawful objects remain void forever. No subsequent event, consent, or performance can convert such an agreement into a valid contract. This ensures that illegality is not cured by later approval or performance.

• Criminal and Civil Liability May Arise

In certain cases, agreements with unlawful objects may lead to criminal or civil liability. If the object involves criminal acts, the parties may be punished under relevant criminal laws in addition to the contract being void. This strengthens the legal framework by imposing penalties beyond denial of contractual enforcement and discourages illegal conduct.

Importance of Lawful Object

Under the Indian Contract Act, 1872, the object of a contract refers to the purpose or intention for which an agreement is made. According to Section 23, the object of an agreement must be lawful; otherwise, the agreement becomes void. The requirement of a lawful object plays a crucial role in ensuring that contracts promote legality, morality, and public welfare. The importance of lawful object lies in maintaining the sanctity of contracts and preventing misuse of contractual freedom.

• Ensures Legality of Contracts

The most important role of a lawful object is that it ensures the legal validity of contracts. Even if all other essentials of a valid contract are present—such as free consent, lawful consideration, and competent parties—the contract will fail if the object is unlawful. This condition ensures that agreements are formed only for legal purposes and discourages illegal or prohibited activities.

• Protects Public Interest and Welfare

The requirement of a lawful object safeguards public interest and social welfare. Agreements that are opposed to public policy, immoral, or harmful to society are declared void to prevent negative social consequences. For example, agreements encouraging corruption, bribery, or obstruction of justice are void because they harm public confidence in legal and administrative systems. Thus, lawful object acts as a protective shield for society.

• Prevents Abuse of Freedom of Contract

The principle of freedom of contract allows parties to enter into agreements of their choice. However, this freedom is not absolute. The condition of lawful object restricts parties from misusing contractual freedom for illegal or unethical purposes. It ensures that private agreements do not conflict with public law, morality, or national interest.

• Maintains Moral Standards in Society

Lawful object plays an important role in maintaining moral and ethical standards in society. Agreements with immoral objects—such as those promoting immoral relationships or unethical practices—are declared void. By refusing legal recognition to such agreements, the law reinforces social values and discourages conduct that is morally unacceptable.

• Prevents Circumvention of Law

Some agreements may appear legal on the surface but are designed to defeat the provisions of law indirectly. The concept of lawful object prevents such circumvention. For instance, agreements formed to evade taxes or bypass statutory obligations are void. This ensures strict compliance with legal provisions and strengthens the rule of law.

• Ensures Judicial Integrity

Courts refuse to enforce agreements with unlawful objects to maintain judicial integrity. If courts were to enforce such contracts, it would amount to supporting illegal activities. The requirement of lawful object ensures that judicial institutions are not misused to settle disputes arising out of illegal or immoral agreements.

• Promotes Fair Business Practices

In commercial transactions, lawful object encourages fair and ethical business practices. It prevents agreements involving fraud, misrepresentation, exploitation, or unfair competition. As a result, businesses operate within legal limits, promoting transparency, trust, and long-term economic stability.