
Contents
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I Introduction I Introduction
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II The Statutory Framework II The Statutory Framework
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III Nexus between Illegality and the Agreement: ‘Object or Consideration’ III Nexus between Illegality and the Agreement: ‘Object or Consideration’
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IV Categories of Illegality IV Categories of Illegality
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1 Object/Consideration is ‘Forbidden by Law’ 1 Object/Consideration is ‘Forbidden by Law’
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2 Object/Consideration ‘Defeat(s) the Provisions of Any Law’ 2 Object/Consideration ‘Defeat(s) the Provisions of Any Law’
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3 Object/Consideration Involves ‘Injury’ or is ‘Fraudulent’ 3 Object/Consideration Involves ‘Injury’ or is ‘Fraudulent’
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4 Object/Consideration is Contrary to ‘Public Policy’ or ‘Morality’ 4 Object/Consideration is Contrary to ‘Public Policy’ or ‘Morality’
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i Administration of justice i Administration of justice
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ii Public administration ii Public administration
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iii Marriage and family life iii Marriage and family life
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iv The rule in Brojo Nath iv The rule in Brojo Nath
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v Foreign illegality v Foreign illegality
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vi Constitutional policy vi Constitutional policy
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V Consequences of Illegality V Consequences of Illegality
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1 Severance 1 Severance
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2 Passing of Property 2 Passing of Property
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3 Restitution 3 Restitution
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VI Conclusion VI Conclusion
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Cite
Abstract
This chapter examines the rules relating to illegality under the Indian Contract Act of 1872. The rule against the enforceability of illegal agreements reflects the regulatory objective of ensuring that the private law of contract does not facilitate conduct that is prohibited by other laws or conduct that is disfavoured as a matter of public policy or morality. While the rules relating to illegality can serve to promote regulatory objectives, they can also lead to injustice in the form of enrichment of a party who is complicit in illegality and the imposition of financial losses that may be excessive. The chapter provides an overview of the relevant statutory framework, the degree of connection that the law requires between illegal conduct and a contract before it will intervene to make the contract unenforceable, the categories of illegality, and the legal consequences of illegality. The chapter concludes that the Indian law of illegality strikes a defensible balance between promoting regulatory objectives and minimising injustice to individual contracting parties.
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