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

Ravi promises to pay Sunil Rs 1,00,000 a year to supervise a lawful textile business and also an illegal trade in other goods. Sunil agrees. Which statement is correct under Section 24?

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. The single salary covers both lawful and illegal work, so the lawful part cannot be separated and enforced.

  1. AOnly the part relating to the illegal trade is void, and the textile part is enforceable
  2. BThe agreement is void because part of the object and consideration is unlawfulCorrect
  3. CThe agreement is voidable at Ravi's option only
  4. DThe agreement is valid because the major part is lawful

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 salary is a single consideration for both lawful and unlawful work. Therefore the entire agreement is void, not just the illegal part. The distractor splitting the agreement ignores the wording of the section.

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