Agreements Opposed to Public Policy

Certain types of agreements are harmful to Society. Such agreements are called agreements opposed to public policy. Such agreements are declared as Void by Status. The following are the agreements opposed to public policy.

  • Agreements in Restraint of Trade
  • Agreements in Restraint of Marriage
  • Agreements in Restraint of Personal Freedom
  • Agreements in Restraint of Parental Rights
  • Agreements with regard to Compromise of offence
  • Agreements with regard to sale of Public Offices and Titles
  • Agreements with Alien Enemy
  • Agreements based on Bribes
  • Agreements to form Monopoly
  • Agreement to Commit a Crime
  • Agreements to defraud Creditors
  • Agreements to defraud Government
Agreements in Restraint of Trade: The agreements which restrict trade business or Profession are called agreements in restraint of trade. One citizen cannot restrict lawful business of the other.
  • A case on this point is Madhav Vs Raj kumar. A and B enters into a contract according to which B has to close down his business for which he would be paid amount by A. B closes his business but, A fails to pay B the agreed amount. B sues A for recovery and court decides that it is an agreement in restraint of trade and hence void.
Agreements in Restraint of Marriage: The agreements which create restriction on marriage are called agreements in restraint of marriage. One person cannot restrict the other from getting married.
  • A case on this point is Lowe Vs Peerless. In this case an agreement gets formed between A and B according to which A should marry B only and B should marry A only. If only one of them breaches the agreement a compensation of $ 2000/- is to be paid. Court decides that the language used in the agreement is creating restriction on marriage and hence void.
Agreements in Restraint of Personal Freedom: The agreements which restrict Personal Freedom are opposed to public policy. For example: An agreement to do slavery falls under this group.
  • Related case is Ramasastry Vs Ambela Karen. In this case a contract of loan gets formed between A and B and their Contract Specifies that B has to join as slave at A’s house till Settlement of debt. Court decides that the contract is void.
Agreements in Restraint of Parental Rights: The agreements which restrict rights of Parents on their Children are called agreements in restraint of Parental Rights. By Virtue of an agreement, Parents cannot waive up their rights. Such agreements are harmful to Children.
  • A case on this point is Maharaja of Vijayanagar Vs Secretary of State for India. In this case the king entrusts his children to Court of Wards. On that occasion a deed is executed by king according to which he is giving absolute Power on his Children to court of Wards. After Sometimes Court of Wards decides to send those Children to England for higher Studies. Then the king Sues for injunction order restricting Court of Wards from Sending the Children to England. Court issues Such injunction order Saying that by means of an agreements Parental rights cannot be restricted and Court of Wards Cannot gets powers on kings Children.
Agreements with regard to Compromise of Offence: The agreements which are outcomes of Compromise with regards to an offence are opposed to public policy.
  • A Case on this point is Venkata Subba Rao Vs Chandanmal. In this A is an Ayurveda doctor and B is a money lender. A Contract of loan gets formed between them according to which A has to pledge his medical instruments with B as Security. But A fills-up a wooden box with bricks etc and pledges the box. It comes under public cheating in accordance with Sec. 420 of IPC. After coming to know about the fraud B wants to file criminal prosecution against A. In the mean while A`s Son-in-law namely C makes a Compromise and executes a deed in support of debt taken by A. There after B sues C for recovery Court decides that the Contract which has got formed between B and C is agreement with regard to Compromise of offence and hence void.
Agreements with regard to sale of Public Offices and Titles: Titles and positions in Government will be given basing on personal talent. That person who has obtained them cannot transfer them to some other person by means of an agreement.
  • A case on this point is Swamynathan Vs Muthu Swamy. In this case a Contract gets formed between A and B according to which A has to transfer his position in govt. to B for certain consideration. It is opposed to Public Policy and hence held to be Void.
Agreements with Alien Enemy: Agreements with aliens are Valid so long as there are good relations between two Countries. When War breaks out between the Countries that Contract becomes opposed to public policy and hence void.
  • A case on this point is Metropolitan Water board Vs Dick Kerr And Company. Metropolitan Water board wants to construct a dam and enters into a contract with people who are aliens (other nation engineers). The contract is breached followed by a war in between the two nations. Metropolitan Water board files a case up on breach of contract. But, the case loses its validity since a war broke out in between the two nations.
Agreements based on Bribes: When ever there is involvement of Crime or Corruption, Such agreement is said to be opposed to public policy.
  • Related case is Pandyan Vs Roy. In this case there is an agreement between A and B according to which B has to pay Rs.15000 to A and for that A has to arrange for admission of A`s Son to a Medical College. Court decides that their agreement is opposed to Public Policy.
Agreements to form Monopoly: Monopoly is Suitable to several unfair trade practices and to exploit public. So an agreement to create monopoly is harmful to Society.

Agreement to Commit a Crime: In case where objective of the agreement is to conduct a Crime like murder etc, it becomes opposed to public policy.

Agreements to Defraud Creditors: If debtors form an agreement to defraud their Creditors, Such agreement is opposed to public policy.

Agreements to Defraud Government: Agreements to evade taxes etc create loss to government they are opposed to public policy.

7 comments:

  1. thank u for explainin it in a simplest manner

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  2. case studies with explanations is the best i liked

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  3. its realy explained in a easy way...

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  4. if two companies plan to create a software that infringes privacy (but there is no law against it as such) and there has been a notification by the gov. against the same would it amount to defrauding the government ? or would it simply be opposed to public policy because of the privacy issue ?

    whats the major concern in this scenario ?

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  5. Two companies plan to create a software that infringes privacy and concern in this scenario?

    There is no violation of privacy since the agreement was made willingly by the companies in mutual interest and benefit, of sharing their customers' information within themselves. However, if the information of the customers was revealed to the outside world, the same might attract the offence u/s 72 of Information Technology Act, 2000 for breach of confidentiality and privacy.

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  6. many many thanks

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  7. This was good,
    Could this be the Answer to the below Question
    Under the law of contract there are certain contracts that are said to be opposed to public policy,Give five such of contracts?

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