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

Which of the following fact situations is an example of an agreement void under Section 24 because of partly unlawful consideration or object?

The agreement under which Sanjay runs a lawful grocery business and an illegal traffic in other articles for one salary is void under Section 24. One consideration covers both a lawful and an unlawful object, so the unlawful part makes the whole agreement void.

  1. ASanjay agrees to run a lawful grocery business and an illegal traffic in other articles for a fixed yearly salaryCorrect
  2. BSanjay agrees to run only a lawful grocery business for a fixed yearly salary
  3. CSanjay agrees to sell his house to Tara for ₹10,00,000
  4. DSanjay promises to pay Tara ₹1,000 if a third person fails to pay a debt owed to Tara

Explanation

Section 24 applies where a single consideration is given for lawful and unlawful objects together, as in the indigo illustration. The first option has exactly this feature. The other options involve wholly lawful considerations and objects, as in the illustrations to Section 23.

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