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Effects of illegal object and consideration

Illegal agreements are prohibited since the performance, formation, or object of such agreement is against the law. Illegal agreements have the following effects:
  • An illegal agreement is void ab initio i.e. not enforceable by law
  • A collateral transaction to illegal agreement is illegal, therefore void

Amar borrows ₹ 20,000 from Akbar to buy a revolver to shoot Anthony. Since the object of the transaction is illegal, Akbar cannot recover this amount if he has given a loan knowing that Amar is taking it to purchase a revolver. If Akbar is able to prove that he did not had a notice of the intention of amar then Akbar can lawfully can claim the amount.


Note: When the illegality is the result of coercion or fraud of the other party, the Court can compel the guilty to return the money or property obtained by way of coercion / fraud.

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