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Discuss the doctrine of public policy. Give examples of agreements that are considered opposed to public policy.

Discuss the doctrine of public policy. Give examples of agreements that are considered opposed to public policy.

Course: B.Com

1 Answer

Public policy is considered highly uncertain and keeps on fluctuating with the passage of time. In other words, it varies with the habits and fashions of the day along with the growth of commerce and usage of trade. In other words, an agreement which conflicts with morals of the time and contravenes any establishes interest of society is regarded as void as it is opposed to public policy. That is, an agreement which tends to be injurious to the public or against the public good is void as being opposed to public policy.

Agreements may offend against the public policy, or tend to the prejudice of the State in time of war (trading with the enemies, etc.), by tending to the perversion or abuse of municipal justice, (stifling prosecution, champerty, maintenance) or in private life by attempting to impose inconvenient and unreasonable restrictions on the free choice of individuals in marriage or their liberty to exercise any lawful trading or calling.


The following agreements are treated as opposed to public policy:

Trading with Enemy: All agreements made with an alien enemy are illegal on the basis of being opposed to public policy, unless they are permitted by the Government.
Agreements for stifling prosecution: An agreement for stifling, that is, agreements for compounding or suppressing of criminal charges for offenses of a public nature are illegal and void.

Contracts in the Nature of Champerty and Maintenance: Maintenance refers to the promotion of litigation in which a person has no interest of his own. That is, an agreement where one party having no interest in suit, agrees to assist another to maintain suit. Champerty is a bargain whereby one party is to assist another in recovering property and, in turn, is to share in the process of the action.

It was held in the case of A vs B, that champerty and maintenance are not illegal in India, and that the Courts will refuse to enforce to enforce such agreements only when they are extortionate and unconscionable and which are not made with the bonafide object of assisting the claims of the person unable to carry on litigation himself. For example: A agreed to pay Rs 10,000 to B to enable Kim to file a. suit for the recovery of his property and B promised to give him 3/4th share in the property, if recovered. The agreement was held to be champertous and thus void.

Agreements for the sale of public offices and titles: The agreements for the sale or transfer of public offices or for obtaining appointments are regarded as opposed to the public policy as they interfere with the selection of the best qualified person. For example: A, promises to pay B Rs. 5,000 if B secures him an employment in the public service. The agreement is void.

Agreements in restraint of parental rights: An agreement which prevents a parent to exercise his right of guardianship is treated as void on the basis of public policy. According to law, the father is the guardian of the minor child and. then mother is the guardian of the child after the father. And it is this right that cannot be bartered away by any agreement. For example: A father having two minor sons agreed to transfer their guardianship in favor of Mrs. Besant and also agreed not to revoke the transfer. Subsequently, he filed a suit for recovery of the boys and a declaration that he was the rightful guardian, the court held that he had the right to revoke his authority and get the children back.

Agreements in restraint of marriage: According to Section 26, every agreement in restraint of marriage of any person other than a minor is void.

Marriage brokerage or brokerage contracts: A marriage contract is the one in which, one or more persons receives money or money’s worth in the consideration of marriage. Thus, dowry is considered as a marriage brokerage and therefore is unlawful and void.

Agreements in restraint of legal proceedings: An agreement which restricts a party absolutely from enforcing his legal rights arising under a contract or an agreement which curtails the period of limitation within which the legal rights may be enforced is void.
Agreements interfering with course of justice: An agreement which interferes with. the course of justice is treated as void based on being opposed to public policy.
Agreements in restraint of trade: Any agreement which is in either total or partial restraint of trade is treated as void under Section 27.

Agreements tending to create monopolies: An agreement which tends to create monopoly is void on the ground of public policy. For example: In District Board of A vs B, a local body granted a monopoly to A to sell vegetables in a particular locality. It was therefore held that the agreement was void.

Agreement in restraint of personal liberty: An agreement that unduly restrict the personal freedom of persons are regarded as void and illegal being against public policy. For example: A, the debtor, borrowed money from Y, the money lender, on the promise that he would not, without his written consent, leave his job, borrow money dispose of his property or change his residence. It was held that the agreement was void and illegal as it restricted the personal freedom of X.

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April 14, 2019