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the rights of the party in illegal agreements in contract Act

(Querist) 10 March 2008 This query is : Resolved 
Hi experts,
I know that in contract act if the agreement is illegal, the collateral events also become unenforceable. Suppose Bank is lending money to a person, who uses it for his illegal buisness. Can the bank enforce the contract, which is collateral to a void agreement.
Manish Singh (Expert) 11 March 2008
Details are insufficient since we need to look into the subject matter of the agreement made between you and the bank.
If the agreement itself says that the money lent to you will be used for any illegal purpose then it can not be enforced.
Manish Singh (Expert) 12 March 2008
kavita jain (Expert) 12 March 2008
An illegal agreement is one which, like the void agreement has no legal effects between the immediate parties.Further transactions collateral to it also become tainted with illegality and are therefore not enforceable. on the other hand a collateral transaction can be supported by a void agreement.
Rajesh Kumar (Expert) 17 March 2008
The issue needs graeter examination. The agreement between the bank and the customer is for lending of money, which is not illegal. For what purpose the money was used is not very relevant, and the bank can enforce the contract in the court of law.
Nevertheless, if the borrower is able to prove that the bank knowingly lend money to be used for illegal purposes, the contract is viod ab initio and cannot be enforced.
SANJAY DIXIT (Expert) 25 July 2008
For getting more accurate opinions from the hon'ble members ; ALWAYS provide full details at the first inst.
G. ARAVINTHAN (Expert) 17 September 2008
I agree with Sanjay sir. Exchanging knowledge is to be done in a completed way. For that we have to give sufficient details.
Sachin Bhatia (Expert) 17 October 2009
please provide full details


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