- (b) "Public policy is like an 'unruly horse' which cannot be controlled easily." Explain the statement and mention the agreements which are against public policy.
Verified Answer
- Core Legal Answer & Context: The statement "Public policy is like an 'unruly horse' which cannot be controlled easily" is a famous dictum by Justice Burrough in Richardson v. Mellish (1824). It highlights the inherent difficulty in defining and applying the concept of 'public policy' in law. Public policy refers to the principles and standards that are considered to be fundamental to the well-being of society. Agreements that are deemed to be against public policy are considered void because they are injurious to the public good or contravene established governmental policy. The 'unruly horse' metaphor suggests that public policy is a vague, subjective, and ever-evolving concept. Judges, when invoking public policy, must be cautious not to impose their personal moral views, as this could lead to arbitrary decisions and uncertainty in the law. The scope of public policy is not static; it changes with societal norms, economic conditions, and legislative intent, making it challenging to confine within rigid boundaries.
Agreements which are against public policy are considered void under contract law. Some common categories of such agreements include:
- Agreements in Restraint of Trade (Section 27): Contracts that unduly restrict a person from carrying on a lawful profession, trade, or business are generally void. Reasonable restraints, such as those in partnership agreements or sale of goodwill, may be valid.
- Agreements in Restraint of Marriage (Section 26): Agreements that prevent a person from marrying or marrying a particular person are void, as they are against the freedom of marriage.
- Agreements in Restraint of Legal Proceedings (Section 28): Contracts that restrict a party from enforcing their rights through ordinary legal proceedings or that limit the time within which they can do so are void. Exceptions exist for arbitration agreements.
- Agreements for Stifling Prosecution: Agreements made to drop a criminal prosecution in exchange for a consideration are void, as they interfere with the administration of justice.
- Agreements for Immoral or Illegal Objects (Section 23): Contracts whose object or consideration is immoral or illegal are void. This includes agreements for illicit cohabitation, promoting prostitution, or committing crimes.
- Agreements Interfering with Administration of Justice: This includes agreements to influence judges, procure false evidence, or obstruct legal processes.
- Agreements Tending to Create Monopolies: Contracts designed to create monopolies or restrict competition are generally against public policy.
- Agreements for Sale of Public Offices/Titles: Agreements to buy or sell public offices or honors are void, as they lead to corruption and inefficiency in public administration.
- Agreements to Defraud Creditors: Contracts made with the intention of defrauding creditors are void.
- Maintenance and Champerty: Agreements where a third party assists in litigation with no legitimate interest, often in exchange for a share of the proceeds, can be void if they are oppressive or extortionate.
- Relevant Statutes and Sections:
- Indian Contract Act, 1872:
- Section 23: What considerations and objects are lawful, and what are not (agreements whose object or consideration is unlawful, immoral, or opposed to public policy are void).
- Section 26: Agreement in restraint of marriage, void.
- Section 27: Agreement in restraint of trade, void.
- Section 28: Agreement in restraint of legal proceedings, void.
- Important Landmark Cases:
- Gherulal Parakh v. Mahadeodas Maiya (AIR 1959 SC 781): The Supreme Court of India discussed the scope of public policy, emphasizing that it is not static and can evolve. However, it cautioned against extending the doctrine to new heads unless it is clearly injurious to the public good. The court held that a wagering contract, though void, is not necessarily opposed to public policy.
- Central Inland Water Transport Corp. v. Brojo Nath Ganguly (AIR 1986 SC 1571): The Supreme Court applied the doctrine of public policy to strike down an unfair and unconscionable clause in an employment contract, holding that such clauses, which exploit the weaker party, are against public policy.
- Clear Conclusion: The 'unruly horse' metaphor aptly describes the dynamic and challenging nature of public policy. While essential for upholding societal values and preventing harmful agreements, its application requires judicial restraint and careful consideration of evolving societal norms. The Indian Contract Act, through Section 23 and related provisions, codifies several categories of agreements deemed against public policy, ensuring that contracts align with the broader public interest.