The Champerty Agreement and Indian Contract Act: What You Need to Know
The Champerty Agreement is a legal term that refers to an agreement between a party who has no legal right to a claim and a third party who agrees to assist that party in pursuing that claim in exchange for a share of the proceeds of the lawsuit. This type of agreement has been a contentious issue in many countries, including India, where it has been the subject of numerous court cases over the years.
In India, the Champerty Agreement is governed by Section 23 of the Indian Contract Act. According to this section, any agreement that involves the transfer of any interest in property that is the subject of litigation is considered void. This means that any agreement that involves the sharing of proceeds from a lawsuit is not enforceable under Indian law.
The reason for this is that the law seeks to prevent third parties from interfering in legal proceedings. The Champerty Agreement is seen as a way for third parties to profit from litigation, which is considered unethical and against public policy. The underlying principle behind this provision is that parties to a lawsuit should not be influenced by the promises of third parties and should be free to pursue their claims without any outside interference.
However, there are certain exceptions to this rule. For example, if a person provides financial assistance to another party in a lawsuit in exchange for a share of the proceeds, this may not be considered a Champerty Agreement if the person providing the financial assistance has a legitimate interest in the outcome of the lawsuit. This is known as a “maintenance agreement,” and it is allowed under the law.
In addition, there are certain cases where a Champerty Agreement may be allowed. For example, if a third party provides legal services to a party in a lawsuit in exchange for a share of the proceeds, this may not be considered Champerty if the third party is a licensed attorney and is providing legal services in a legitimate manner.
In conclusion, the Champerty Agreement is an important legal concept in India that is governed by Section 23 of the Indian Contract Act. While the law seeks to prevent third parties from interfering in legal proceedings, there are certain exceptions to the rule, such as maintenance agreements and agreements with licensed attorneys. It is important for parties involved in litigation to be aware of these rules and to ensure that any agreements they enter into are legal and enforceable. As a copy editor, it is important to understand these legal concepts in order to ensure that any content related to them is accurate and informative.
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