Discussion
During an India - Country X war, India declares X an enemy. A (an Indian citizen) enters into a contract to supply medicines to B (a citizen of X) via a neutral intermediary and a bank.
Which of the following is most accurate under the Indian Contract Act, 1872 ?
Answer: A
The contract is void, because trading with an enemy in war is prohibited and is against public policy.
Once war breaks out and a country is declared an enemy, contracts with its subjects that involve trade or intercourse with the enemy are unlawful. Under Section 23 of the Indian Contract Act, 1872 an agreement whose object is opposed to public policy is void, and trading with the enemy is a recognised head of such public policy, because it may aid the enemy's war effort.
Routing payment through a neutral bank and supplying humanitarian goods do not change the character of the bargain; any lawful exception would have to come from a government licence, not from the parties. The contract is void from the outset, not merely voidable or valid until cancelled.
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