In view of the coronavirus pandemic, we are making LIVE CLASSES and VIDEO CLASSES completely FREE to prevent interruption in studies
Business Laws > Indian Contract Act 1872: Part II > Expressly Void Agreements
Indian Contract Act 1872: Part II

Expressly Void Agreements

There are certain essential elements of a valid contract. And if those elements are not present, the contract would then be void or voidable. However, there are certain agreements that are expressly void agreements. This means these agreements that are declared void by the law itself. Let us take a look.

Expressly Void Agreements

The Indian Contract Act 1872 defines a void agreement as “an agreement that is not enforceable by law”. And there can be many times of void agreements, some of which we have covered in the previous articles. But the contract states certain agreements that are expressly declared as void agreements. Let us take a look.

Expressly Void Agreements

1] Agreement in Restraint of Marriage

Any agreement that restrains the marriage of a major (adult) is a void agreement.  This does not apply to minors. But if an adult agrees for some consideration not to marry, such an agreement is expressly a void agreement according to the contract act.

So A agrees that if B pays him 50,000/- he will not marry such an agreement is a void agreement.

2] Agreement in Restraint of Trade

An agreement by which any person is restrained from plying a trade or practising a legal profession or exercising a business of any kind is an expressly void agreement. Such an agreement violates the constitutional rights of a person.

However, there are a few exceptions to this rule. If a person sells his business along with the goodwill then the buyer can ask the seller to refrain from practising the same business at the local limits.

So if according to such an agreement as long as the buyer or his successor carry on such a business the agreement to restrain the trade of the seller will be valid.

Similarly, if an outgoing partner can enter into such a restraint of a trade agreement with the partnership firm. Also, a contract between partners not to carry out any competing business during the continuance of a partnership is also a valid contract.

One point to keep in mind regarding the above agreements is that the terms of such an agreement have to be reasonable. Such reasonable terms are not defined under the act but are to be judged according to each unique situation and circumstance.

Let us take for example the case of physician A who employs B as his assistant for three years. For this duration of three years, B agrees not to practice medicine anywhere else. This is a valid agreement even though it is in restraint of trade.

But say A a lawyer sells his legal practice to B along with the goodwill. And A agrees never to practice as a lawyer anywhere in the state for the next 20 years. This is not a valid agreement since the terms are completely unreasonable.

3] Agreement in Restraint of Legal Proceedings

An agreement that prevents one party from enforcing his legal rights under a contract through the legal process (of courts, arbitration, etc) then such an agreement is expressly void agreement.

However, there are exceptions like, if the agreement states that any dispute between parties will be referred to arbitration and the amount awarded in such arbitration will be final will be a valid contract.

Also if the parties agree that any dispute between them in the present or the future will be referred to arbitration, then such an agreement is also valid. But such a contract has to be in writing.

4] An Agreement Whose Meaning is Uncertain

An agreement whose meaning is uncertain cannot be a valid agreement, it is a void agreement. If the essential meaning of the contract is not assured, obviously the contract cannot go ahead. But if such uncertainty can be removed, then the contract becomes valid.

Say for example A agrees to sell to B 100 kg of fruit. This is a void contract since what type of fruit is not mentioned. But if A exclusively sells only oranges then the agreement would be valid because the meaning would now be certain.

5] Wagering Agreement

According to the Indian Contract Act, an agreement to wager is a void agreement. The basis of a wager is that the agreement depends on the happening or non-happening of an uncertain event. Here each side would either win or lose money depending on the outcome of such an uncertain event.

The essentials of a wagering agreement are as follows. If all elements are met then the agreement will be void.

  • Must contain a promise to pay money or money’s worth
  • Is conditional on the happening or non-happening of a certain event
  • The event must be uncertain. Neither party can have any control over it
  • Must be the common intention to bet at the time of making the agreement
  • Parties should have no other interest other than the stake of the bet

The following agreements are not considered wagering agreements,

  1. Chit Fund
  2. Commercial Transactions, i.e Transactions of the Share MArket
  3. Athletic Competition and Competitions involving Skills
  4. Insurance Contracts

Solved Question on Void Agreements

Q: A sells to B his very famous fast food franchise. As per the agreement, A agrees not to open another restaurant for the next 15 years. Is this a valid agreement?

Ans: Yes, this is actually a valid agreement. An agreement in restraint of trade should have reasonable terms. While 15 years is not a short time, the terms actually are reasonable since the restaurant was famous and so the sale price would be high. And so this will not be one of the void agreements.

Share with friends

Customize your course in 30 seconds

Which class are you in?
5th
6th
7th
8th
9th
10th
11th
12th
Get ready for all-new Live Classes!
Now learn Live with India's best teachers. Join courses with the best schedule and enjoy fun and interactive classes.
tutor
tutor
Ashhar Firdausi
IIT Roorkee
Biology
tutor
tutor
Dr. Nazma Shaik
VTU
Chemistry
tutor
tutor
Gaurav Tiwari
APJAKTU
Physics
Get Started

1
Leave a Reply

avatar
1 Comment threads
0 Thread replies
1 Followers
 
Most reacted comment
Hottest comment thread
1 Comment authors
Pratham Sethi Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
Pratham Sethi
Guest
Pratham Sethi

K and A had entered into a contract where K was to supply 50,000 phones to A within 2 months from the date of signing of contract. K was to procure the phones from China and deliver the same to A. The rate of the phone was Rs. 5000/- a piece (inclusive of all taxes and duties). At the time of the execution of the contract, the duty was at 5% (five percent). Immediately after the execution of the Agreement, India had increased the duties to 1000% (one thousand percent). Therefore, K was finding it difficult to sell the phones… Read more »

Amber
Guest
Amber

section 20 of the contract act 1872 says that if there is a mistake of fact and both the parties did not know the fact occurred after assigning the contract then it can’t be enforceable by law and the money or any reward will be return to the party who accepted that offer(section 65,72 of contract act).

Sushil Kumar Singhal
Guest
Sushil Kumar Singhal

At the time of execution of contract Taxes and duties were different than while implementing the contract. which was not foreseeable hence K and A if agree than contract can be implemented otherwise K can rescind the contract.

RANABEER HALDER
Guest
RANABEER HALDER

K CAN CLAIM RELIEF UNDER DOCTRINE OF FRUSTRATION

Get Question Papers of Last 10 Years

Which class are you in?
No thanks.