05 December 2014
B borrows Rs. 5,000 from A and enters into a contract with an alien to import prohibited goods. A knows of the purpose of the loan. The transaction between B and A is collateral to the main agreement. It is illegal since the main agreement is illegal.
If the main agreement is void, the collateral transactions to it are not affected. In the above case, if B had entered into a void agreement with a minor, the contract between B and A would not have been affected.
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