Skip to content

CA Foundation · Business Laws · The Indian Contract Act, 1872

Sanjay, a shopkeeper in Indore, agrees to pay Rs 20,000 to Vikram, a government clerk, in return for Vikram's promise to leak confidential tender details of a public department. Vikram does not leak the details. Sanjay wants his money back, which he had already paid as an advance. What is the legal position?

The agreement is void because its object, buying confidential government tender information, is unlawful and opposed to public policy. Courts will not assist either party, so Sanjay generally cannot recover the advance he paid under it.

  1. AThe agreement is valid and Sanjay can recover the advance as damages
  2. BThe agreement is voidable at Sanjay's option and he can recover the advance
  3. CThe agreement is void as its object is unlawful, and the advance generally cannot be recoveredCorrect
  4. DThe agreement is valid but enforceable only after the tender is awarded

Explanation

An agreement whose object is opposed to public policy, such as obtaining confidential tender information from a public servant, is unlawful and void under section 23. Courts do not help a party to recover money paid under such an agreement. The option calling it voidable is wrong because unlawful-object agreements are void, not voidable at anyone's option.

Did you get it right without looking?

One question tells you little. A timed set on The Indian Contract Act, 1872 shows your real accuracy, how long you take and where you lose marks.

Practise The Indian Contract Act, 1872Free diagnostic mock

More The Indian Contract Act, 1872 questions