Business Law Assignment

1. BUSINESS LAW
Assignment-2
By
Poovendran
18UR44

2. INTRODUCTION
• An agreement is unlawful if the Court regards it opposed to public policy. What is public
policy? Public policy means policy of the law or the Government for the public good or
welfare.
• Every Government tries to maximize the welfare of its citizens. Therefore, it makes a
policy to discourage or prohibit any thing which is against the welfare or interest of
society. For example, trading with enemy, selling of public offices, agreement restraining
people from carrying on lawful trade, etc. are injurious to society. Hence, they are
considered as opposed to public policy and have been declared void.
• The concept of public policy has invited a lot of criticism. The reason is that this concept
is very vague. There is a danger of it being misused. It is for this reason it has been
remarked by Lord Halsbury that categories of public policies are closed and a Court
cannot invent a new head of public policy.

3. 1. AGREEMENTS FOR TRADING WITH AN
ENEMY:
• We have already seen earlier that an agreement made with
an alien enemy is void. This is based on the ground of public
policy. An agreement with an enemy is likely to benefit the
enemy. It is for this reason such contracts, during war, are
either suspended or dissolved. If they are not likely to
benefit the enemy, these may be suspended during the war
and can be revived after the hostilities are over.

4. 2. AGREEMENTS INTERFERING WITH
ADMINISTRATION OF JUSTICE:
• No one is allowed to interfere with administration of justice.
These are of the following types:
• (a) Agreements stifling prosecution:
• Stifling implies abuse of law. The law does not permit a
person to make money out of a crime. You shall not make a
trade of a felony. It is based on the noble doctrine that if a
person has committed a crime, he must be tried by a Court
of law and if found guilty, must be punished.

5. 2. AGREEMENTS INTERFERING WITH
ADMINISTRATION OF JUSTICE:
b) Maintenance and Champerty:
These two terms are used in English Law. Maintenance implies assisting or financing of suits by third
parties having no real interest, for its prosecution or defense. Champerty implies a bargain by which
one party is to assist the other in recovering property, and is to share in the proceeds of the action.
Thus maintenance and champerty are likely to encourage purposeless, mis-chievous and retaliatory
litigation. Hence both of these are illegal under English Law.
In India, maintenance and champerty are not necessarily void. An agreement to be champertous in
India must be grossly unfair on unconscionable ground or opposed to public policy. Thus an
agreement to share the proceeds of litigation if recovered in consideration of other party’s supplying
the funds in good faith to continue the litigation is not in itself opposed to public policy. However,
where the advances are made by way of gambling in litigation, the agreement to share the proceeds
of litigation is opposed to public policy and hence void.

6. 2. AGREEMENTS INTERFERING WITH
ADMINISTRATION OF JUSTICE:
• (c) Agreements which interfere with administration of
justice:
• No one is allowed to interfere with the course of justice.
Hence an agreement which interferes with administration of
justice is unlawful.

7. 3. AGREEMENTS TO VARY PERIOD OF
LIMITATION:
An agreement to defeat the object of any law is unlawful.
Hence an agreement to vary the period of limitation will be
void as it would defeat the object of the law of limitation.
According to the law of limitation, an action for breach of a
contract must be brought within three years from the date of
its breach. Thus an agreement to make this period longer or
shorter than three years will be void. However, in practice this
has not been applied strictly by law Courts in India. For
example, a clause providing that “no suit shall be brought
against the company in connection with the said policy later
than one year after the time when the cause of action accrues”
was up held.

8. 4. TRAFFIC IN PUBLIC OFFICES:
It implies transfer of public office for some
consideration or inducing public officers to act
for consideration in cash or kind. Such
agreements are contrary to public policy as
these are likely to encourage corruption or
inefficiency among the officials. Hence such
agreements are void.

9. 5. AGREEMENTS CREATING INTEREST
OPPOSED TO DUTY:
Duty must be done. Therefore, such
agreements are also likely to
increase corruption and inefficiency
among the officials. Hence such
agreements are void.

10. 6. AGREEMENT RESTRAINING PERSONAL
FREEDOM:
Under contract act personal freedom
has been guaranteed by our
Constitution. The law will not allow an
agreement which takes away the
personal liberty of a person. Recently,
Government has done away with
bonded labour to ensure this freedom.

11. 7. AGREEMENTS INTERFERING WITH
PARENTAL RIGHTS AND DUTIES:
Guardianship rights cannot be allowed to be
sold away or transferred in public interest.
Children’s/ward’s interest should be properly
protected. Accordingly, law has vested this
authority in the parents of children. Father is
the lawful guardian of his .minor child. In the
absence of father, this right is transferred to the
mother.

12. 8. AGREEMENT INTERFERING WITH
MARITAL STATUS:
•Agreements interfering with marital status or
duties are immoral Hence these have been
declared void.
•Example:
•A lends Rs. 1,000 to a married woman to file a
suit against her husband to get divorce and
marry him after the divorce. Agreement is void.

13. 9. AGREEMENT OF MARRIAGE BROKAGE
OR BROKERAGE:
•Everyone has a liberty to marry
according to his free choice. This free
choice should not be disturbed by
monetary consideration or engaging
paid brokers to procure matches.