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

Anita agrees to pay Rs 12 lakh a year to Bharat, who will supervise her lawful textile unit and also manage an illegal trade in prohibited goods. What is the effect of this agreement?

The whole agreement is void. Under Section 24, if any part of a single consideration for one or more objects is unlawful, the agreement is void. Bharat's salary is a single sum for lawful and unlawful work, so the lawful portion cannot save it.

  1. AIt is valid for the textile supervision and void only for the illegal part
  2. BIt is void in its entirety because part of the single consideration or object is unlawfulCorrect
  3. CIt is voidable at the option of Anita
  4. DIt is valid if the illegal portion is a minor part of the work

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 of indigo manufacture combined with illegal traffic is identical in principle. The Act does not allow severing the lawful portion here, nor does it consider how minor the illegal part is.

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