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

Mehta Traders engages Rohan for a yearly salary of ₹6,00,000 to manage its lawful cloth export business and also to run an illegal traffic in banned goods. What is the position of this agreement under Section 24?

The agreement is void. The salary is a single consideration for one lawful object and one unlawful object. Section 24 makes the agreement void when any part of the object is unlawful, so the lawful cloth export work does not save it.

  1. AVoid, because the object of Rohan's promise is in part unlawfulCorrect
  2. BValid as a whole, because the main object is lawful
  3. CValid only for the cloth export work, with the salary reduced proportionately
  4. DVoidable at Rohan's option because part of the object is lawful

Explanation

The salary is a single consideration for two objects, one lawful and one unlawful. Under Section 24 this makes the agreement void, as in the indigo illustration. The option allowing enforcement for the cloth work is wrong because the section does not permit this.

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