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

Anil agrees to manage, for Seema, her lawful textile business and also an illegal trade in prohibited goods, for a single salary of ₹10,000 per month. Which statement is correct under Sections 23 and 24 of the Act?

The whole agreement is void. Section 24 provides that where part of a single consideration for several objects is unlawful, the agreement is void. The single salary covers both the lawful textile work and the illegal trade, so no part is saved.

  1. AThe agreement is valid to the extent of the textile business only
  2. BThe agreement is voidable at Seema's option
  3. CThe whole agreement is void because part of the object is unlawfulCorrect
  4. DThe agreement is valid but Anil cannot recover any salary for the illegal part

Explanation

Section 24 says that if any part of a single consideration for one or more objects, or any part of one of several considerations for a single object, is unlawful, the agreement is void. Here the single salary is the consideration for both a lawful and an unlawful object, so the whole agreement is void. The agreement is not split into valid and invalid parts.

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