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

Asha promises to drop a prosecution for theft that she has instituted against Vivek, and Vivek promises to restore the value of the things taken. What is the effect of this agreement under Section 23?

The agreement is void because its object is unlawful. Section 23, illustration (h), treats a promise to drop a criminal prosecution in exchange for restoring stolen property as having an unlawful object, so the arrangement cannot be enforced even though the loss is being made good.

  1. AValid, because Vivek is repaying the loss
  2. BVoid, because its object is unlawfulCorrect
  3. CVoidable at Vivek's option
  4. DValid if Asha first obtains the court's consent

Explanation

Section 23 makes an agreement void when its object or consideration is unlawful, including when it is opposed to public policy or forbidden by law. Illustration (h) states that a promise to drop a prosecution for robbery in return for restoring the stolen goods is void because its object is unlawful. Repayment of the loss does not cure this.

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