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

Anil agrees to superintend a legal manufacture of cloth for Bharat and also an illegal traffic in other articles. Bharat promises Anil a salary of Rs 10,000 per month. Which statement is correct?

The agreement is void in its entirety. Under Section 24, if any part of a single consideration for several objects is unlawful, the whole agreement is void. Here the salary is a single consideration covering both a legal and an illegal activity, so the lawful part does not save it.

  1. AThe agreement is valid for the legal manufacture part only
  2. BThe agreement is void in its entirety because the object is partly unlawfulCorrect
  3. CThe agreement is voidable at Bharat's option
  4. DThe agreement is valid, and only the illegal part is struck down by the Court

Explanation

Section 24 provides that if any part of a single consideration for one or more objects is unlawful, the agreement is void. The illustration to Section 24 is similar. The agreement is therefore void as a whole, not valid for the lawful part.

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