AGREEMENTS OPPOSED TO PUBLIC POLICY

Agreements opposed to public policy

Some of the agreements which are held to be opposed to public policy are-

(1) Trading with enemy: Any trade with person owing allegiance to a Government at war with India without the licence of the Government of India is void, as the object is opposed to public policy. Here, the agreement to trade ouends against the public policy by tending to prejudice the interest of the State in times of war.

(2) Stifling Prosecution: An agreement to stifle prosecution i.e. “an agreement to present proceedings already instituted from running their normal course using force” tends to be a perversion or an abuse of justice; therefore, such an agreement is void. The principle is that one should not make a trade of felony. The compromise of any public ouence is generally illegal. Under the Indian Criminal Procedure Code, there is, however, a statutory list of compoundable ouences and an agreement to drop proceeding relating to such ouences with or without the permission of the Court, as the case may be, in consideration the accused promising to do something for the complainant, is not opposed to public policy. Thus, where A agrees to sell certain land to B in consideration of B abstaining from taking criminal proceeding against A with respect to an ouence which is compoundable, the agreement is not opposed to public policy. But, it is otherwise, if the ouence is uncompoundable.

(3) Maintenance and Champerty: Maintenance is an agreement in which a person promises to maintain suit in which he has no interest.

Champerty is an agreement in which a person agrees to assist another in litigation in-exchange of a promise to hand over a portion of the proceeds of the action.

The agreement for supplying funds by way of Maintenance or Champerty is valid unless

(a) It is unreasonable so as to be unjust to other party or

(b) It is made by a malicious motive like that of gambling in litigation or oppressing other party by encouraging unrighteous suits and not with the bonafide object of assisting a claim believed to be just.

(4) Traffic relating to Public Offices: An agreement to traffic in public office is opposed to public policy, as it interferes with the appointment of a person best qualified for the service of the public. Public policy requires that there should be no money consideration for the appointment to an oflce in which the public is interested. The following are the examples of agreements that are void; since they are tantamount to sale of public offices.

     (1) An agreement to pay money to a public servant in order to induce him to retire from his oflce so that another person may secure the appointment is void.

    (2) An agreement to procure a public recognition like Padma Vibhushan for reward is void.

(5) Agreements tending to create monopolies: Agreements having for their object the establishment of monopolies are opposed to public policy and therefore void.

(6) Marriage brokerage agreements: An agreement to negotiate marriage for reward, which is known as a marriage brokerage contract, is void, as it is opposed to public policy. For instance, an agreement to pay money to a person hired to procure a wife is opposed to public policy and therefore void.

Note: Marriage bureau only provides information and doesn’t negotiate marriage for reward, therefore, it is not covered under this point.

(7) Interference with the course of justice: An agreement whose object is to induce any judicial oflcer of the State to act partially or corruptly is void, as it is opposed to public policy; so also is an agreement by A to reward B, who is an intended witness in a suit against A in consideration of B’s absenting himself from the trial. For the same reasons, an agreement which contemplates the use of under-hand means to influence legislation is void. Similarly, as agreement to induce any executive oflcer of the State to act partially or corruptly is void.

(8) Interest against obligation: The following are examples of agreement that are void as they tend to create an interest against obligation. The object of such agreements is opposed to public policy.

  (1) An agreement by an agent to receive without his principal’s consent compensation from another for the performance of his agency is invalid.

 (2) A, who is the manager of a firm, agrees to pass a contract to X if X pays to A `200,000 privately; the agreement is void.

(9) Consideration Unlawful in Part: By virtue of Section 24, if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.”

This section is an obvious consequence of the general principle of Section 23. There is no promise for a lawful consideration if there is anything illegal in a consideration which must be taken as a whole. The general rule is that where the legal part of a contract can be severed from the illegal part, the bad part may be rejected and the good one can be retained. But where the illegal part cannot be severed, the contract is altogether void.

Example: A promises to superintend, on behalf of B, a legal manufacturer of indigo and an illegal traflc in other articles. B promises to pay A salary of ` 20,000 per month. The agreement is void, the object of A’s promise and the consideration for B’s promise being in part unlawful.