Lawful Object

Chapter 1

Lawful object can be broadly defined as within the bounds of the law. If the object of the contract is illegal by statute or common law, the contract will be void and unenforceable in the courts. For example, a contract would not be considered lawful if the acquisition involved criminal activity or was a direct violation of competition policy (Competition Act) or deliberate evasion of taxes (Income Tax Act). In such instances, the contract would be totally void. Examples of illegality or no lawful object would include contracts:

  • contrary to public policy or good morals;
  • injurious or prejudicial to the safety of the state or to the public service;
  • tending to pervert justice or abuse the legal process;
  • in restraint of trade such as price fixing;
  • in restraint of personal liberty or marriage; and
  • for the commission of a criminal offence or civil wrong, or relating to gambling or wagering (unless authorized by means of provincial statutes).

Often, buyers and sellers believe that a sale made on a Sunday is illegal and void. The Supreme Court of Canada held that the particular section of the Lord’s Day Act relating to this issue was unconstitutional in view of the Canadian Charter of Rights and Freedoms.

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