Introduction
The Indian Contract Act, 1872, lays the foundation for contractual obligations and enforcement in India. Among its key provisions, the Act differentiates between void agreements and voidable contracts. It also outlines the legality of consideration and the concept of public policy through Section 23. These sections play a crucial role in determining the enforceability of agreements and protecting the rights of contracting parties.
What Is A Void Agreement under Section 2(g)
According to Section 2(g) of the Indian Contract Act, an agreement that is not enforceable by law is known as a void agreement. These agreements are invalid from the beginning and have no legal effect. They cannot be enforced by any party in a court of law. Common examples include agreements with unlawful consideration or agreements that lack the essential elements of a valid contract.
What Is A Voidable Contract under Section 2(i)
Section 2(i) defines a voidable contract as a contract that is enforceable by law at the option of one or more parties but not at the option of others. For instance, if a contract is formed under coercion or undue influence, the affected party has the right to either affirm or cancel the agreement. This provision protects the rights of parties who enter into contracts under unfair conditions, ensuring justice and fairness in contractual relationships.
What Is A Lawful and Unlawful Consideration under Section 23
Section 23 of the Indian Contract Act specifies when consideration or the object of an agreement is considered lawful. It states that the consideration is lawful unless:
- It is forbidden by law
- It defeats the provisions of any law
- It is fraudulent
- It involves injury to person or property or
- It is deemed immoral or opposed to public policy by the court.
If the consideration or object of an agreement falls under any of these categories, the agreement becomes void. This provision ensures that contracts do not violate legal or moral standards and are made for lawful purposes only.
The concept of public policy under Section 23 plays a significant role in assessing the validity of agreements. Although the Act does not explicitly define “public policy,” the courts interpret it to include actions that protect and promote public welfare. Any agreement that goes against public policy is declared void from the outset (void ab initio). Unlike Section 16, which allows a party to void a contract based on unconscionability or unfair terms, Section 23 empowers courts to declare an entire agreement void if its object is unlawful or against public policy.
Conclusion
The Indian Contract Act clearly distinguishes between void and voidable contracts, providing clarity on when an agreement is enforceable. Section 23 further strengthens contract law by outlining when consideration is considered lawful. By addressing issues of fraud, injury, illegality, and public policy, the Act ensures that contractual relationships remain fair, legal, and beneficial to society. Understanding these provisions helps both individuals and businesses avoid invalid agreements and navigate the legal landscape of contract law with confidence.
