DEFINITION

Literally

The word ‘Legality’ means ‘the state of being legal’   ‘Object’ means ‘purpose’   and ‘Consideration’ means ‘reason’.  
So the meaning of legality of object and consideration is the state of being any reason or purpose legal.

Traditionally

1.    An agreement will not be enforced by the court if its object or the consideration is unlawful. By the expression “Object of an Agreement” is meant its purpose on design. The object and the consideration must both be lawful, otherwise the agreement is void.     

2.    The object or consideration of an agreement must be lawful. In order to make the agreement, a valid contract, for, Section 10 lays down that all agreements are contracts if made for lawful consideration and with a lawful object. Section 23 declares what kinds of consideration and objects are not lawful. If the object or consideration is unlawful for one or the other of the reasons mentioned in Section 23, the agreement is illegal and therefore void (Section 23).  


UNLAWFUL CONSIDERATION AND OBJECT

1.    If it is forbidden by law-
If the consideration or the object of a contract were forbidden by law, it would be unlawful and hence unenforceable.

Example-

a)    A promises to pay B Rs.1000 at the end of six months, if C, who owes that sum of B, fails to pay it. B promises to grant time to C accordingly. Here the promise of each party is a consideration for the promise of the other party, and they are lawful considerations.

b)    Promises for a certain sum paid to him by B, to make good to be the value of his ship wrecked on a certain voyage. Here A’s promise is the consideration for B’s payment and B’s payment is consideration for A’s promise. These are lawful consideration.

Case-
a)    An agreement to sublet a license to sell grass issued under the Madras Abkari Act 1886 would not be enforceable, because the object of the Act is the protection of the public as well as the revenue. Thithi Pkurudsu vs Bheemudu, (1902) 26 Mad. 930.

b)    Where a license to cut grass was given by the Forest Dept. and one of the terms of the license was that the licensee should not assign his interest on the license without the permission of the Forest Officer, and a fine was prescribed for a breach of this condition, it was held that there being nothing in the Forest Act to make it obligatory upon the parties to observe the conditions of the license the assignment would be binding upon the parties, though it was competent to the Forest Officer to revoke the license if he thought fit to do so. It was so held because the Act did not forbid the transaction but merely imposed a condition for administrative purpose. Nazarali v. Baba Miya (1916) 40 Bom. 64.  

2.      If it were permitted, it would defeat the provisions of any law
The consideration of an agreement would be unlawful if it is of such nature that if permitted, would defeat the provisions of any law. (Section 23)
 
Case-
a)    P let a flat to R of $1200 a year. To reduce the municipal tax he entered into two agreements with R. One, by which the rent was stated to be $450 only and the other by which R agreed to pay $750 for services in connection with the flat. In a suit filed against R to recover $750, it was held that the agreement was made to defraud the municipal authority and was void and A cannot recover the money. Alexander v. Rayson.

b)    A trading partnership consisted of more than 20 persons and it was not registered rendering it an illegal association. A suit was brought for its dissolution. It was held that the suit would not lie for it would defeat the provisions of the Companies Act. Mewa Ram v. Ram Gopal, (1926) 48 all, 735.  

c)    An agreement buy the debtor not to rise the plea of limitation, should a suit have to be filed,is void as tending to limit the provisions of the Limitation Act (Rama Murthy vs Gopayya).  


3.      If it is fraudulent
An agreement, whose object or consideration is to fraud others, is unlawful and hence void.

Example-
a)    A being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain from B a lease of land belonging to his principal. The agreement between A and B is void, as it implies a fraud by concealment by A on his principal to obtain for B a lease of land belonging to his principal.

Case-
a)    A, B and C enter into an agreement for the division among them of gains acquired, or to be acquired, by them by fraud. The agreement is void, as its object is unlawful. [Illustration (e) to section 23].  

b)    Where the object of an agreement between A and B was to obtain a contract from the commissariat department for the benefit of court , which could not be obtained for both of them without practicing fraud on the department, it was held that the object of the agreement was fraudulent, and that the agreement was therefore void. Shaib Ram Vs Nagar Mel, (1884) Punj. Record no 63.