Fundamentals of Business Laws and Business Communication · Consideration and Legality of Object

Lawful Consideration and Object under Section 23

Updated 10 October 2026 · Fact-checked

Section 23 of the Indian Contract Act says the consideration and object of an agreement are lawful unless they are forbidden by law, defeat law, are fraudulent, injure a person or property, or are immoral or opposed to public policy. If any one applies, the agreement is void. To solve a question, test the facts against each ground.

Understand Lawful Consideration and Object (Section 23)

A contract needs consideration, which is what each side gives in return. It also needs an object, which is the purpose the agreement is meant to achieve. Section 23 says both must be lawful. If either is unlawful, the agreement is void.

The Act lists what makes consideration or object unlawful. It is forbidden by law when it breaks an Act or rule that carries a penalty or prohibition. It defeats the provisions of law when it would undo a legal rule indirectly. It is fraudulent when the parties plan to cheat someone. It involves injury to the person or property of another. It is immoral or opposed to public policy when courts see it as harmful to society.

Immoral examples include agreements for prostitution or for future illicit cohabitation (e.g. paying a woman to become a mistress). Public policy heads are developed by the courts. The Act's own illustrations on this ground are limited. Commonly cited heads include trading with an enemy country during war, stifling prosecution of a crime, selling public offices or titles, agreements that interfere with the course of justice, and marriage brokerage contracts. Agreements to pay someone to get a government job done by influence are also against public policy.

Courts apply the public policy ground with caution. It covers only harm to the public good that is clear. It is not a free ground to cancel any bargain a judge dislikes.

Remember the effect. An agreement unlawful under Section 23 is void. Illegal agreements are void, and collateral transactions to them are also tainted. But not every void agreement is illegal. Study the difference between void, voidable and illegal agreements alongside this topic.

Key formulas to remember

Rule of Section 23: Consideration or object lawful unless it falls in one of 6 grounds; if unlawful, agreement is void; Applies to both consideration and object. One ground is enough.
Six unlawful grounds: Forbidden by law | Defeats law | Fraudulent | Injures person or property | Immoral | Opposed to public policy; Memorise this order. Questions are built around these six.
Test for forbidden by law: Act is prohibited or punishable by law → unlawful; Example: agreeing to pay for smuggling goods.
Test for defeating law: Agreement would cause the effect of a legal rule to be avoided → unlawful; Example: a transfer made only to dodge a legal restriction.
Effect of unlawful object: Unlawful consideration or object → agreement void; Courts generally do not help enforce it. Recovery of money paid is limited by the in pari delicto principle (both parties equally at fault), with exceptions.

How to solve Lawful Consideration and Object (Section 23) questions

Use this method for any fact-based question on Section 23.

1Identify the agreement and ask what each side gives. That is the consideration.
2Identify the purpose of the agreement. That is the object.
3Check whether the act is forbidden by any law or carries a punishment.
4Check whether it would defeat a legal rule, cheat someone, or injure a person or property.
5Check whether it is immoral or against public policy, such as stifling prosecution or trading with an enemy.
6If any ground applies, say the consideration or object is unlawful and the agreement is void.
7If none applies, say the agreement is lawful and enforceable if other essentials are met.

Quickest way: Six-ground scan

When to use it: For MCQs where you have under a minute per question.

Find the purpose in the question in one phrase, such as bribe, smuggling or cheating.
Match it to a ground: crime means forbidden by law, cheating means fraudulent, harm to someone means injury, justice or government means public policy.
If one ground fits, mark void or unlawful.
Eliminate options that call a lawful bargain void or that ignore the ground.
If the option set says valid, check that the purpose is plainly harmless.

Common mistakes in Lawful Consideration and Object (Section 23)

Thinking only consideration must be lawful.
Students focus on the word consideration.
Fix: Remember that Section 23 covers both consideration and object.
Calling every void agreement unlawful.
Void and unlawful sound similar.
Fix: Void agreements such as those without certainty are not unlawful. Unlawful ones fall in the six grounds.
Treating any harsh bargain as against public policy.
Students use their own sense of fairness.
Fix: Use the known heads, such as trading with an enemy or stifling prosecution.
Mixing up fraudulent and the fraud that makes consent not free.
Both use the word fraud.
Fix: Under Section 23 the object itself is to defraud others. In free consent, one party is deceived into agreeing.
Forgetting that one ground is enough.
Students search for several defects.
Fix: If any single ground applies, the agreement is void.

Worked examples

Example 1

Ramesh agrees to pay Suresh ₹50,000 if Suresh does not give evidence against him in a criminal case. Is the agreement valid?

Show the solution

Consideration is Suresh's promise to keep silent. The object is to stop a prosecution.
Suppressing evidence and stifling prosecution interferes with the course of justice.
The ground is public policy under Section 23.

Answer: The consideration and object are opposed to public policy because they interfere with justice, so the agreement is void.

Example 2

Mehta Traders agree to pay ₹2,00,000 to Kumar for taking charge of a shipment of smuggled goods. Which ground applies?

Show the solution

Smuggling is prohibited and punishable by law.
The object of the agreement is to carry out that prohibited act.
So the object is forbidden by law.

Answer: Forbidden by law. The agreement is void and Kumar cannot enforce payment.

Exam tips

Learn the six grounds as a list. Many MCQs ask you to pick the ground or the odd one out.
Link each standard example to one ground, such as stifling prosecution to public policy.
Watch for options that call a valid agreement void just because it looks unusual.
Read the purpose, not the amount. Value rarely matters in Section 23 questions.

Practice questions from Consideration and Legality of Object

Lawful Consideration and Object (Section 23): frequently asked questions

What does Section 23 of the Indian Contract Act deal with?

It states what consideration and objects are lawful. It also lists the cases in which they are unlawful, and says such agreements are void.

What is opposed to public policy in contract law?

It means harmful to public good. The heads are developed by courts. Standard examples are trading with an enemy, stifling prosecution, interfering with justice and selling public offices.

Give examples of immoral agreements.

Agreements for prostitution and for future illicit cohabitation, such as paying a woman to become a mistress, are standard examples. They are against accepted morality, so they are void.

Is an agreement with an unlawful object valid?

No. It is void. Courts generally do not help enforce it. Recovery of money paid under it is limited by the in pari delicto principle, though there are exceptions.