Section 23 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 23 says which considerations and objects are lawful. They are lawful unless one of five grounds applies. If a ground applies, the consideration or object is said to be unlawful, and every agreement of which the object or consideration is unlawful is void.
The consideration or object of an agreement is lawful, unless it is (1) forbidden by law; (2) of such a nature that, if permitted, it would defeat the provisions of any law; (3) fraudulent; (4) involves or implies injury to the person or property of another; or (5) the Court regards it as immoral, or opposed to public policy. In each of these cases the consideration or object is unlawful, and every agreement of which the object or consideration is unlawful is void.
The five grounds
| # | Ground | Text |
|---|---|---|
| 1 | Forbidden by law | "it is forbidden by law" |
| 2 | Defeats a law | "is of such a nature that if permitted, it would defeat the provisions of any law" |
| 3 | Fraudulent | "is fraudulent" |
| 4 | Injury to person or property | "involves or implies injury to the person or property of another" |
| 5 | Immoral or against public policy | "the Court regards it as immoral, or opposed to public policy" |
A footnote to the word "law" in the first ground refers to sections 26, 27, 28 and 30 of the Act, which are agreements the Act itself declares void. If you are drafting a contract and want to check that its object and consideration are lawful, our agreement drafting service can help you review it.
The effect
The text after the five grounds reads: "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."
Two points stand out:
- The test applies to both consideration and object. The consideration is what is given or promised in return (see section 2(d)); the object is what the agreement aims at. Either may be unlawful.
- The result is void: not enforceable by law (section 2(g)). It is not merely voidable.
Section 10 also lists lawful consideration and lawful object among the conditions of a contract. See our article on section 10.
The Act's eleven illustrations
The first four illustrations show lawful considerations. The rest show unlawful ones. They are restated here in plain words.
Lawful considerations
In each of illustrations (a) to (d) the promise of each party is the consideration for the promise of the other, and the Act calls them lawful considerations. (a) A sells his house to B for 10,000 rupees. (b) A promises to pay B 1,000 rupees after six months if C, who owes that sum to B, fails to pay it, and B promises to grant time to C. (c) A promises, for a sum paid by B, to make good to B the value of his ship if it is wrecked on a certain voyage. (d) A promises to maintain B's child, and B promises to pay A 1,000 rupees yearly for the purpose.
Unlawful objects or considerations
(e) A, B and C agree to divide among themselves gains acquired, or to be acquired, 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 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 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).
Note on the Penal Code. Illustration (k) names the Indian Penal Code. From 1 July 2024 the Indian Penal Code was replaced by the Bharatiya Nyaya Sanhita. We quote the Act as it stands.
Illustrations (e) and (g) show the fraud ground, (i) the ground of defeating a law, and (j) and (k) the immoral ground. Illustration (h) shows that dropping a prosecution for a price is an unlawful object; illustration (k) shows that an agreement can be void as immoral even if the act is not punishable under the Penal Code.
A modern example (ours, not the Act's)
Girish, a contractor, agrees with Hema, a supplier, that she will invoice him for materials she never supplies, so he can show inflated costs to a client. In return he will pay her a share of the extra amount. The object is fraudulent, one of the five grounds. Under section 23 the object is unlawful, and the agreement is void. If a court were asked to enforce Hema's claim to her share, section 23 would be the answer: the agreement is void.
What can the parties change?
Section 23 does not let the parties make an unlawful object lawful by agreement. A clause in a contract saying "the parties agree this is lawful" does not alter the test. What the parties control is the content of the deal; they can choose objects and considerations that fit within the law. Where an agreement is partly unlawful, section 24 applies; see our article on section 24.
Practical points
- Test both sides. Ask whether the object and the consideration are each lawful.
- Check the specific law. Ground 1 depends on what other laws forbid; this article does not list them.
- Beware of side arrangements. Illustration (g) shows how a payment to an agent behind the principal's back can make an agreement void.
- Remember public policy. Ground 5 turns on whether the Court regards the agreement as immoral or opposed to public policy; the text gives no further list.
Need help checking the object of an agreement?
If you are structuring a deal and want to be sure that its consideration and object are lawful, or you are reviewing an agreement that may touch one of the five grounds, our agreement drafting team can go through it with you.
Key takeaways
- Consideration or object is lawful unless forbidden by law, defeating a law, fraudulent, injuring another's person or property, or immoral or opposed to public policy (s.23).
- If unlawful, the agreement is void.
- The test applies to both consideration and object.
- The Act's eleven illustrations show lawful exchanges and void agreements, including (k), which cites the Indian Penal Code.
Read next
- Sections 20 to 22: mistake
- Section 24: agreement void if consideration or object is unlawful in part
- Section 25: agreement without consideration
- Void and voidable contracts: sections 24 to 30
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.