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

A, the agent of a landowner, agrees for money, without the knowledge of his principal, to obtain for B a lease of land belonging to the principal. Under Section 23, the agreement between A and B is:

The agreement is void because it implies a fraud by concealment by the agent on his principal. Section 23 treats a fraudulent object or consideration as unlawful, so the payment by B does not make the agreement enforceable.

  1. AValid, because B paid money for the lease
  2. BValid, because agency needs no consideration
  3. CVoid, as it implies a fraud by concealment on the principalCorrect
  4. DVoidable at the option of the principal only

Explanation

The illustration to Section 23 declares such an agreement void because it implies a fraud by concealment by the agent on his principal. Payment of money does not cure the fraud. Section 185 deals with consideration for creating an agency, which is a different point.

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