Final answer:
Legality of object in a contract means that the contract must not be for an illegal purpose or against public policy. It ensures that the contract is lawful and can be enforced by the legal system, which is critical for economic transactions and growth.
Step-by-step explanation:
The term legality of object within a contract refers to the requirement that the purpose of the contract must be lawful. When determining the legality of object in a contract, one must consider if the contract itself is for a purpose that is not illegal or against public policy. Therefore, the correct answer to the question that a valid contract must have legality of object is:
C) The contract must not be for an illegal purpose or against public policy.
Contracts are an extension of property rights, and they provide individuals with the ability to enter into agreements with others regarding the use of their property. Recourse through the legal system is provided in cases of noncompliance. For instance, an employment agreement between a surgeon and patient signifies an exchange where services offered by the surgeon constitute property. In a system where contracts are enforceable, the contractual rights ensure that terms are met, allowing for the surgeon to seek legal action if payment is not received, thus preventing the theft of property—these services.
An example of how legality of object plays a role in economic activity is seen in exclusive dealing agreements. These can be both legal and illegal, depending on their impact on competition. If such an agreement encourages competition, as in the case of automobile manufacturers, it is deemed legal. Conversely, if it stifles competition by allowing one retailer exclusive rights to sell certain products, thus impacting other retailers, it would contravene the legality of object within competition law.