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Explain the Unlawful Agreements under Contract Act

2022年12月24日…未分類…

Unlawful agreements are agreements that are not legally binding. There are various reasons as to why an agreement may be considered unlawful under Contract Act. Here is an overview of what constitutes an unlawful agreement and why it`s important to avoid them.

The Contract Act of 1872 is a piece of legislation that governs the formation and enforcement of contracts in India. Under the Contract Act, an agreement becomes enforceable only when it is formed with the free consent of the parties involved.

However, certain types of agreements are deemed unlawful and therefore unenforceable. An agreement becomes unlawful when it is formed with the intention of committing an illegal act or is against public policy or morality.

For example, a contract to provide illegal drugs or weapons would be considered unlawful, and therefore, unenforceable. Similarly, an agreement between two individuals to commit a crime or fraud would also be considered illegal.

The Contract Act also provides that an agreement that restricts personal liberty or freedom is unlawful. For instance, an agreement between an employer and employee that specifies that the employee cannot work for any other competing company after leaving the employer, would be considered unlawful.

An agreement that attempts to evade the provisions of any law or regulation is also considered unlawful. For example, a contract that seeks to circumvent the tax laws by underreporting or hiding income would be considered illegal.

It`s important to avoid unlawful agreements as they are not legally binding. This means that if any party breaches the agreement, the other party cannot seek legal recourse. In addition, engaging in an unlawful agreement can also lead to legal consequences and criminal charges.

It`s crucial that all parties involved in a contract ensure that the agreement is legal and enforceable. As a general rule of thumb, if the contract involves any activity that is illegal or against public policy, it should be avoided.

To conclude, the Contract Act of 1872 lays down provisions to protect the interests of all parties to a contract and ensure that all agreements are legal and enforceable. An unlawful agreement is unenforceable, and as such, it is crucial to avoid them to avoid legal and financial consequences.