B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100601: Business Law
Unit 1: Legality of object and consideration and void agreement
Answer the following. (1 mark)
1. What is a void agreement?
Any agreement having unlawful objects or considerations is a void agreement.
2. Which section of Indian Contract Act speaks of three things, namely, consideration
and for the agreement?
Section 23
3. What is maintenance?
Maintenance is an agreement whereby a person promises to maintain a suit in which he
has no interest.
4. What the characters an unlawful agreement?
An unlawful agreement is not enforceable by law.
5. What is meant by Ex tupri cause non oritur action?
It means no action arises from a base cause.
6. What is an illegal agreement?
An illegal agreement is one which is forbidden by law.
7. State any one example of illegal agreement.
An agreement to commit a murder.
8. Which section of the Contract Act specifies agreements in restraint of marriage?
Section 26
9. Give any one exception to agreement in restraint of legal proceedings.
1. An agreement to refer all future disputes in connection with a contract to arbitration
2. An agreement to refer all present disputed with regard to a contract to arbitration
1
,10. Mention any one Case under which consideration or object becomes unlawful.
Forbidden by law
Briefly answer the following. (2 marks)
1. List two circumstances under which the consideration or object of an agreement is
considered unlawful?
Ans. Consideration or object is unlawful under the following cases
• It is forbidden by law
• it would defeat the provisions of any law
2. Mention any two features of legality of object.
Ans. 1. The object of the agreement should be legal
2. Consideration for both the parties should be legal
3. What is meant by trafficking public office?
Ans. Refer to trafficking public office agreements for the sale or transfer of public offices or
titles for the procurement of a public recognition. For example sale or transfer of Padma
Vibhushan or Param Veer Chakra for monetary consideration are unlawful.
4. List agreements that interfere marital duties.
Ans. Such agreements include:
• A promise by married person to marry during the lifetime or after the death of
spouse
• An agreement in contemplation of divorce.
5. What is meant by in pari delicto, potior est condition defendants?
Ans. It is a maxim which means that cases of equal guilt, the defendant is in a better position
than that of a plaintiff.
6. Mention any two cases under which a contract becomes void.
Ans. A contract becomes void in the following under the following cases:
• A contract becomes void by impossibility or illegality
• A voidable contract becomes void when the party whose consent is not freely
repudiates the contract
7. Mention exceptions agreements in restraint of trade.
2
,Ans. 1. Statutory exceptions
2. Judicial interpretation
8. Mention any two special cases in wagering agreements?
Ans. 1. Commercial transaction
2. Lotteries
9. List any two types of void agreements declared by the Indian Contract Act.
Ans. 1. Agreements by minor and unsound mined.
2.Agreements made under a mutual mistake of fact
10. Mention two essential features of a wagering agreement.
Ans. 1. Uncertain event
2. Each party must stand to win or lose.
11. Differentiate between an illegal agreement and a void agreement.
Ans. An illegal agreement is both unenforceable and forbidden but a void agreement is only
unenforceable.
Answer the following (limit 250 words). (5 marks)
1. List six circumstances which would make and object or consideration unlawful. Also
explain any two of them.
Ans.
1. Forbidden by law
2. Defeat of the provision of law
3. Fraudulent
4. Injurious to person or property
5. Immoral
6. Public policy
Forbidden by law: Object or consideration becomes unlawful when it is forbidden by
law. An agreement the consideration or object of which is unlawful is void. `Law' in this
connection means the law for the time being in force in India and, therefore, includes
Hindu and Mohamdan Laws and also principles of unwritten law.
3
, An act is forbidden by law when it is punishable by the criminal, law of the country. An
act is forbidden by law when it is prohibited by special legislation or regulations made by
a competent authority under powers derived from the legislature.
Immoral: An agreement the object or consideration of which is immoral, e.g. an
agreement between a husband and wife for future separation, is unlawful.
Example: A married woman was given money to enable her to obtain divorce from her
husband and then marry the lender. Held, the agreement was immoral and the lender
could not recover the money.
2. Write a brief essay on void agreement.
Ans. “An agreement not enforceable by law is said to be void” section 2g.
The Indian Contract Act declares certain agreement as void ab initio and not illegal. An
illegal agreement is one which is forbidden by law. Thus an illegal agreement is both
unenforceable and forbidden but a void agreement is only unenforceable but not illegal.
Void contract is one which is valid when it is entered into, but subsequently something
happens which makes it unenforceable.
Examples
a. A contract becomes void by impossibility or illegality.
b. A voidable contract become void when the party whose consent is not freely
repudiates the contract.
c. A contingent contract to do or not to do something on the happening of an event
become void when the event becomes impossible.
3. What is an illegal agreement? What are effects of illegality?
Ans. An illegal agreement is both unenforceable and forbidden by law.
It has following features
Illegal agreement is unenforceable.
In illegal agreements, a further effect is other transaction which is incidental or
collateral.
Parties to an illegal agreement cannot get any help from a court of law.
The general rule is that no action is allowed on an illegal agreement. This is base on two
maxims.
4
Technology, Uka Tarsadia University
Question Bank 030100601: Business Law
Unit 1: Legality of object and consideration and void agreement
Answer the following. (1 mark)
1. What is a void agreement?
Any agreement having unlawful objects or considerations is a void agreement.
2. Which section of Indian Contract Act speaks of three things, namely, consideration
and for the agreement?
Section 23
3. What is maintenance?
Maintenance is an agreement whereby a person promises to maintain a suit in which he
has no interest.
4. What the characters an unlawful agreement?
An unlawful agreement is not enforceable by law.
5. What is meant by Ex tupri cause non oritur action?
It means no action arises from a base cause.
6. What is an illegal agreement?
An illegal agreement is one which is forbidden by law.
7. State any one example of illegal agreement.
An agreement to commit a murder.
8. Which section of the Contract Act specifies agreements in restraint of marriage?
Section 26
9. Give any one exception to agreement in restraint of legal proceedings.
1. An agreement to refer all future disputes in connection with a contract to arbitration
2. An agreement to refer all present disputed with regard to a contract to arbitration
1
,10. Mention any one Case under which consideration or object becomes unlawful.
Forbidden by law
Briefly answer the following. (2 marks)
1. List two circumstances under which the consideration or object of an agreement is
considered unlawful?
Ans. Consideration or object is unlawful under the following cases
• It is forbidden by law
• it would defeat the provisions of any law
2. Mention any two features of legality of object.
Ans. 1. The object of the agreement should be legal
2. Consideration for both the parties should be legal
3. What is meant by trafficking public office?
Ans. Refer to trafficking public office agreements for the sale or transfer of public offices or
titles for the procurement of a public recognition. For example sale or transfer of Padma
Vibhushan or Param Veer Chakra for monetary consideration are unlawful.
4. List agreements that interfere marital duties.
Ans. Such agreements include:
• A promise by married person to marry during the lifetime or after the death of
spouse
• An agreement in contemplation of divorce.
5. What is meant by in pari delicto, potior est condition defendants?
Ans. It is a maxim which means that cases of equal guilt, the defendant is in a better position
than that of a plaintiff.
6. Mention any two cases under which a contract becomes void.
Ans. A contract becomes void in the following under the following cases:
• A contract becomes void by impossibility or illegality
• A voidable contract becomes void when the party whose consent is not freely
repudiates the contract
7. Mention exceptions agreements in restraint of trade.
2
,Ans. 1. Statutory exceptions
2. Judicial interpretation
8. Mention any two special cases in wagering agreements?
Ans. 1. Commercial transaction
2. Lotteries
9. List any two types of void agreements declared by the Indian Contract Act.
Ans. 1. Agreements by minor and unsound mined.
2.Agreements made under a mutual mistake of fact
10. Mention two essential features of a wagering agreement.
Ans. 1. Uncertain event
2. Each party must stand to win or lose.
11. Differentiate between an illegal agreement and a void agreement.
Ans. An illegal agreement is both unenforceable and forbidden but a void agreement is only
unenforceable.
Answer the following (limit 250 words). (5 marks)
1. List six circumstances which would make and object or consideration unlawful. Also
explain any two of them.
Ans.
1. Forbidden by law
2. Defeat of the provision of law
3. Fraudulent
4. Injurious to person or property
5. Immoral
6. Public policy
Forbidden by law: Object or consideration becomes unlawful when it is forbidden by
law. An agreement the consideration or object of which is unlawful is void. `Law' in this
connection means the law for the time being in force in India and, therefore, includes
Hindu and Mohamdan Laws and also principles of unwritten law.
3
, An act is forbidden by law when it is punishable by the criminal, law of the country. An
act is forbidden by law when it is prohibited by special legislation or regulations made by
a competent authority under powers derived from the legislature.
Immoral: An agreement the object or consideration of which is immoral, e.g. an
agreement between a husband and wife for future separation, is unlawful.
Example: A married woman was given money to enable her to obtain divorce from her
husband and then marry the lender. Held, the agreement was immoral and the lender
could not recover the money.
2. Write a brief essay on void agreement.
Ans. “An agreement not enforceable by law is said to be void” section 2g.
The Indian Contract Act declares certain agreement as void ab initio and not illegal. An
illegal agreement is one which is forbidden by law. Thus an illegal agreement is both
unenforceable and forbidden but a void agreement is only unenforceable but not illegal.
Void contract is one which is valid when it is entered into, but subsequently something
happens which makes it unenforceable.
Examples
a. A contract becomes void by impossibility or illegality.
b. A voidable contract become void when the party whose consent is not freely
repudiates the contract.
c. A contingent contract to do or not to do something on the happening of an event
become void when the event becomes impossible.
3. What is an illegal agreement? What are effects of illegality?
Ans. An illegal agreement is both unenforceable and forbidden by law.
It has following features
Illegal agreement is unenforceable.
In illegal agreements, a further effect is other transaction which is incidental or
collateral.
Parties to an illegal agreement cannot get any help from a court of law.
The general rule is that no action is allowed on an illegal agreement. This is base on two
maxims.
4
