What is legality of object ?

Another essential element of a contract that is legality of object and consideration

The object of consideration of an agreement must be lawful, in order to make the agreement a valid contract, for, Section 10 lays down that all agreements” are contracts if made for lawful consideration and with a lawful object. Section 23 declares what kinds of considerations and objects are not lawful. If the object or consideration is unlawful for one or the other of the reasons mentioned in Section 23, the agreement is ‘illegal’ and therefore void (Sec. 23).

The use of the word ‘illegal’ is somewhat a misnomer here. It usually connotes a punishable offence, but the parties to a so called “illegal agreement,” unless it is expressly punishable by law or amounts to a criminal conspiracy are not liable to punishment. They have committed no offence. They have merely concluded a transaction that will be spurned by the courts.’

The words ‘object’ and ‘consideration’ used in Section 23 are not synonymous. The word ‘object’ here means ‘purpose or design.’ Thus, where a person, while in insolvent circumstances, transferred his property to one of his creditors with the object of defrauding his other creditors, it was held that the agreement was void and the transfer was inoperative (Jajlar Meher Ali vs Budge Budge Jute Mills Co. ). 

 

The court observed that although the consideration of the contract was lawful but the object was unlawful because the purpose of the parties was to defeat the provisions of the Insolvency Law.