Module: | Fundamentals of Contracts
Q4: What is the consequence for a bank, if it provides a loan for a purpose that it knows to be unlawful?
✅ Correct Answer: B
One of the essentials of a valid contract is a lawful object (Section 23, Indian Contract Act). If the purpose of the loan is unlawful, the contract is void and cannot be enforced by the bank to recover the money.