Champerty agreement

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Barnali Dey

Barnali Dey (Querist)
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20 March 2012 sir please explain me the champerty agreement with an example..........

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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22 March 2012 champerty n. an agreement between the party suing in a lawsuit (plaintiff) and another person, usually an attorney, who agrees to finance and carry the lawsuit in return for a percentage of the recovery (money won and paid.) In Common Law this was illegal on the theory that it encouraged lawsuits. Today it is legal and often part of a "contingent fee" agreement between lawyer and client. It is not the same as barratry which is active encouragement of lawsuits.
In maintenance and champerty, malice or prejudice is implied. However, in maintenance, this presumption can be rebutted by proving that –
1) the suit was maintained because of common interest;
2) the suit was maintained out of charity or by religious motive, and
3) the suit was maintained to assist the other party in making reasonable claim arising out of a contract.
In English Law, maintenance and champerty agreements are absolutely void. In India, however, such agreements to avoid should be against public interest for example injurious or harmful to public. Law forbids such type of agreements to discourage litigation.
Stifling prosecutions: Stifling prosecutions mean compounding or compromising prosecutions, agreements not to prosecute an offender are bad as they interfere with the judiciary.
Offences committed are either (a) compoundable, or (b) non-compoundable.
Compoundable offences can be settled outside the Court without the leave of the Court. An offence which is not a serious one or involves only private rights is compoundable. For example, simple assault is a compoundable offence and can be settled by compromise between the parties outside the Court. A non-compoundable offence cannot be settled or compromised outside the Court, for example, grievous hurt, criminal breach of trust, etc.
Marriage brokerage agreements: Agreements for payment of money in considerations of procuring a marriage are illegal. These agreements could be (a) to remunerate or reward a third person in consideration of negotiating a marriage; (b) agree to pay money to parents or guardians, for example dowry (c) where the parents of the bride are not bride are not seeking her welfare; or (d) in consideration of him giving her in marriage is immoral and opposed to public policy. Such agreements are contrary to public policy and, therefore cannot be enforced.
Agreements interfering with administration of justice: Any agreement for the purpose of using improper influence of any kind with Judges or officers is unlawful. Any agreement which obstructs the ordinary process of justice is unlawful. An agreement to delay the execution of a decree is void. Similarly, a promise to pay for giving false evidence is also against public policy.
Agreements tending to create interest against duty: If a person enters into an agreements with a public servant by which the servant has performed an obligation against his public duty or cast up on the public servant obligation inconsistent wit public duty, the agreement is void.
Agreements as regards sale of public offices: Where an agreement is entered into for traffic or sale of the public offices and the selection of an unqualified person, is unlawful. Such an agreement is void. Where a public officer is induced to act corruptly, the act is contrary to public policy.
Where A promised to obtain an employment in a public office against receipt of Rs 1,000 it was held that agreement was against public policy an therefore, void. Similarly, an agreement to pay money to a public servant to induce him to retire and make way for the promisor for appointment is void.
Amount paid for purpose of securing seat in Medical College and not as loan, the agreement is against public policy and the amount is not refundable.
Agreements tending to create monopoly: An agreement tending to create monopolies and exclusives rights, is void.
Waiver of illegality: Agreements which seek to waive an illegality or immorality are void.
Agreements in restraint of marriage: Agreements in restraint of marriage are void. Every agreement min restraint of the marriage of any person other than a minor is void. Parties of age are capable of giving a free and intelligent consent. Therefore, any agreement interfering with or restraining their choice of marriage is void.
Agreements in restraint of trade: Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind is to that extent void.