Chapter II - Of Contracts, Voidable Contracts and Void Agreements
Section 23
Section 23: Lawful consideration and objects
Section 23 explains when consideration or an agreement's object is unlawful. Its categories include legal prohibition, defeating a law, fraud, injury and matters a court regards as immoral or opposed to public policy.
On this page
Need advice on Section 23?
This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
The consideration or object of an agreement is lawful, unless—
it is forbidden by law; or
is of such a nature that if permitted, it would defeat the provisions of any law; or
is fraudulent ; or
involves or implies injury to the person or property of another; or
the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.
Illustrations
(a) A agrees to sell his house to B for 10,000 rupees. Here B’s promise to pay the sum of 10,000 rupees is the consideration for A’s promise to sell the house, and A’s promise to sell the house is the consideration for B’s promise to pay the 10,000 rupees. These are lawful considerations.
(b) A promises to pay B 1,000 rupees at the end of six months, if C, who owes that sum to B, fails to pay it. B promises to grant time to C accordingly. Here, the promise of each party is the consideration for the promise of the other party, and they are lawful considerations.
(c) A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here, A’s promise is the consideration for B’s payment and B’s payment is the consideration for A’s promise and these are lawful considerations.
(d) A promises to maintain B’s child, and B promises to pay A 1,000 rupees yearly for the purpose. Here, the promise of each party is the consideration for the promise of the other party. They are lawful considerations.
(e) 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.
(f) A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful.
(g) A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for 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.
(h) A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken. The agreement is void, as its object is unlawful.
(i) A’s estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing the estate. B, upon an understanding with A, becomes the purchaser, and agrees to convey the estate to A upon receiving from him the price which B has paid. The agreement is void, as it renders the transaction, in effect, a purchase by the defaulter, and would so defeat the object of the law.
(j) A, who is B’s mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A. The agreement is void, because it is immoral.
(k) A agrees to let her daughter to hire to B for concubinage. The agreement is void, because it is immoral, though the letting may not be punishable under the Indian Penal Code (45 of 1860).
Rule and business relevance
An agreement with unlawful consideration or an unlawful object is void. The inquiry is not confined to transactions expressly named as criminal: the section also addresses arrangements designed to defeat the provisions of law and the other stated categories.
Limits and related provisions
A business should not declare a transaction contrary to public policy merely because it dislikes the bargain. Identify the applicable law and relevant category. Separate licensing, regulatory and criminal consequences may exist, but their existence and scope need their own legal analysis.
Hypothetical business example
Hypothetical: a person barred by law from purchasing an asset arranges for another to buy it secretly for them. The review examines whether the arrangement defeats that legal prohibition rather than treating the intermediary's name as decisive.
Practical decision flow
Identify the real consideration and purpose of the arrangement, including side agreements.
Test them against each relevant Section 23 category and the actual governing law.
Obtain advice on enforceability and any independent consequences before performing or seeking to enforce the arrangement.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Identify the real consideration and purpose of the arrangement, including side agreements.
- Test them against each relevant Section 23 category and the actual governing law.
- Obtain advice on enforceability and any independent consequences before performing or seeking to enforce the arrangement.
Avoid
- A business should not declare a transaction contrary to public policy merely because it dislikes the bargain. Identify the applicable law and relevant category. Separate licensing, regulatory and criminal consequences may exist, but their existence and scope need their own legal analysis.
Glossary
- Object
- The purpose of the agreement assessed for lawfulness.
- Defeating the law
- An arrangement whose permitted operation would undermine the provisions of a law within Section 23.
Frequently asked questions
Must the agreement be expressly criminal to be void under this section?
No. Section 23 contains several categories beyond an act expressly forbidden by law.
Can an intermediary automatically cure an unlawful purpose?
No. The real arrangement and whether it defeats the law must be examined.
What is the stated contractual consequence?
Every agreement whose object or consideration is unlawful is void under the provision.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026