VOID AGREEMENT Sees e2ulract It's necessary that an agreement must not be one of those which have been expressly declared void by law. ‘The agreements expressly declared void are as follows: 1. Agreement in Restraint of EXAMPLES 3. A agrees with B that he will not marry with C. itis a void agreement bP Promised to marry L and pay Rs. 2000 to L. if P married someone else. Later, P married X. Held, L could not recover the sum as the agreement rag void. (Lowe vs. Peers) 2, Agreement in Restraint of Tra Every person has the right 10 carry on any lawful trade, business or profession. An agreement that restrains a person fom doing any lawl vada, rutiness or profession is an agreement in restraint of trade and void. [Sec. 27 facdeeedB LEXAMPLE | 3 M bromised to close hie business against the promise of R to pay some amount. It is an agreement in restraint of trade. i Two electronic companies agreed not to employ the other company’s stat for R2ears. The court Neid that t was an agreement in restraint of trade, (Keres Manufacturing Co. vs, Kolok Manufacturing Co. 1959) Exceptions ‘The following are exceptions to agreements in restraint of trade: -™ Bale of Gooawitt26 Void Agreement 3. A sells his bakery io B with goodwill of Ra 10 Lac and 4QfEES Not to open a bakery anywhere in Pakistan The agreement is voi ° _N purchased M's gun manufacturing business. According to agreement, N festicted M from manufacturing guns for 10 years "M oocgen the Fe Maen ind N sued him, it was held that restriction was valid. (Nordeafee vs Maxim Nordenfelt Gun Co) ». Partner's Agreement (Atl agreement among partners in a partnership containing the following condivans is valid A panier May agree not to carry on @ business similar 10 thal of a Partnership while he is a partner ( 1" A teting partner may agree that he will not carty on a similar business within SPectlied period or specified limits A partner may agree on dissolution of fim that he will not carry on a similar business within specified period or specified limits 'v A partner, on the sale of goodwil, may agiee with the buyer not to carry on Similar business within specified period or specified limits EXAMPLE 5 joins @ tirm which deals in spare parts at The Mall, Lahore. 8 agrees that after leaving the firm, he will not carry on similar business cr ‘The Mall for 2 years. The agreementis valid. © Trade Combinations In tO regulate prices. output, etc. is @ valid a which cre: valid, 4. Service Agreement An agreement of service may contain » condition that employee shall not Mor anywhere else curing the aod of employment, iis a valid agreement, & ) dericr joins tne army on the condition that during service he wil not oo Private practice. The agreement is valid. > A clerk employed by 2 company was prevented trom working in the same ‘capacity for any firm within a seven mile radius. (Fitch vs, Dewes 1921)Void Agreement 57 3. Agreoment in Restraint of Legal Proceedings An agreement which prevents a person from taking legal action to enforce his rights arising from a contract ie void. Similarly, an agreement which reduces However the foliowing are exceptions to the above rule. The parties may agree that in case of dispute, the dispute will bo referred to an arbitrator. The parties may agree that neither party shall appeal againsi tne lower court's decision © The parties may agree to select one of the two courts which are equally competent o try a lawsuit EXAMPLES 3. A agrees to sell sugar to B. The parties agree that in case of breach of vo? | DY any Party. none of them would go to the cour. The agreement void. >. A gives a loan to B. The parties agree that iB falls to return the loan, A can soig nie 2 Years instead of 3 years prescriber by law. The agreement is void. 4: Uncertain Agreemen* f ‘An uncertain agreement means an agreement, the meaning of which is not certain or capable of being made certain, ‘Such an agreement is void, In other words, the terms of an agreement must be lear, complete and certain. (Sec. 28) EXAMPLES C 267086 10 sell 100 litres of oll to B. itis not clear which oil C vill supply. The }greement is void \B” C agrees to sell his horse to B for Rs, 1 Lac or Rs. 3Lac, Ihis not clear which is the sale price. The agreement is void, 5. Wagering Arreoment Wager means a bet. A wager is an agreement to pay money or money's worn on the happening or non-happening of a future vent it lee void The essentials of wagering agreement are as follows: 3. There must be a promise to pay money or money's worth. 5. The promise depends on happening or non happening of an event.ae Agreement ©” The event must be uncerain. One party is to win and other is to lose. If one party wins but other does not lose, its not a wagering agreement €. The party should have no interest in the event. {__The parties should have interest in the betting amount oniy. EXAMPLE A agrees to pay Rs. 100 to B if it rains today. If it does not rain, B will pay Rs. 10010 A. It is a wagering agreement Effect of Wagering Agreement The effects are as follows: 1. Awagering agreement is void. (Sec. 30] 2 An agreement which is made to help the performance of any wagering agreement is also void. 3\_No suit can be filed in court to recover the money, commission, brokerage, fee or reward relating to wagering agreement. 4 An agreement to contribute for the payment of a prize in form of cash up to Rs. 500 or more or in any other form to the winners of any horse race is valid 5. Agreement Contingent on Impossible Events An agreement contingent on impossible events is an agreement the EXAMPLE A agrees to pay Rs. 1 Lac to 8 if the sun rises from the West next moming. The agreement is void. 7. Agreement to do Impossible Act ‘An agreement to do an impossible act is void. it means that @ person Cannot perform an act which is impossible for him to perform. [Sec. 56) EXAMPLE A agrees with B to discover gold by magic. The agreement is void Special Casos The following agreements are also valid: 1. Commercial Transaction ‘An agreement where the parties deliver the goods at a future date is a valid contract. But an agreement where one party agrees to pay the difference of Price at current and future date is a wagering agreement.Noid Agreement 50 2, Insurance Contract Insurance contract is a valid contract. In this agreement, the payment of ‘money depends on the happening of a future uncertain event. It differs from wagering agreement because it has an insurable interest and is beneficial to the public. 3. Lottery ‘ A lottery is a game of chance. The lottery is a wagering transaction and illegal. If lottery is authored by the Government, it becomes valid. 4. Crossword Puzzios Where prizes depend upon chance, it is a Yottery and, therefore, 2 wagering transaction. But if prizes depend upon skiil or intelligence, it is a valid transaction. QUESTIONS 1. Define void agreement. Explain the agreements expressly deciared void by * the Contract Act, 2. Discuss the law relating to agreements in restraint of marriage, and uncertain ‘agreements. 3. Explain an agreement in restraint of trade. What are the exceptions to this agreement? 4. Explain wage and’ its essentials? What are the effects of wagering agreement? 5. Explain agreements in restraint of legal proceedings? State the exceptions