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SESSION 6

Void Agreements under Contract Act,1872 (Pakistan)

Unlawful Consideration
The consideration or object of an agreement is lawful,
unless- it is forbidden by law; or is of such a nature that, if
permitted, it would defeat the provisions of any law; or is
fraudulent; or involves or implies injury to the person or
property of another; or the Court regards it as immoral, or
opposed to public policy. In each of these cases, the
consideration or object of an agreement is said to be
unlawful. Every agreement of which the object or
consideration is unlawful is void. (Section 23 Contract Act
1872)
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Public Policy Maze

Wapda v. Kot Addu Power Co. Ltd (Lahore, 2000).

Agreements in Restraint of Marriage

Every agreement in restraint of the marriage of any


person, other than a minor, is void (Section 26,
Contract Act, 1872).

Is it in the public interest to promote marriage??

Agreements in Restraint of Trade

Every agreement by which any one is restrained from


exercising a lawful profession, trade or business of any
kind, is to that extent void (Section 27, Contract Act,
1872).

Agreements in Restraint of Trade: Exception


I

One who sells the good-will of a business may agree


with the buyer to refrain from carrying on a similar
business, within specified local limits, so long as the
buyer, or any person deriving title to the good-will
from him, carries on a like business therein: Provided
that such limits appear to the Court reasonable,
regard being had to the nature of the business.

Shabih Haider Rizvi v. Muhammad Zahoor Uddin


(Karachi, 2001).
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Agreements in Restraint of Trade: Exception II

Under a non-compete clause or covenant not


to compete, one party (usually an employee) agrees
not to enter into or start a similar profession or trade
in competition against another party (usually the
employer).

Should be reasonable as to their time and scope.

Al-Abid Silk Mills Ltd. v. Muhammad Mudassar


Rizvi (Karachi, 2003).
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Agreements in Restraint of Legal Proceedings


Every

agreement, by which any party thereto is restricted


absolutely from enforcing his rights under or in respect of any
contract, by the usual legal proceedings in the ordinary tribunals,
or which limits the time within which he may thus enforce his
rights, is void to that extent (Section 28 Contract Act 1872).

Exception:

This section shall not render illegal a contract by which


the parties agree that any dispute which may arise between them in
respect of any subject or class of subjects shall be referred to
arbitration.

Kadir

Motors v. National Motors (SC Pak., 1992).

Agreements Void for Uncertainty

Agreements, the meaning of which is not certain, or capable of


being made certain, are void (Section 29, Contract Act, 1872).

Rubina Makhdoom v. Sajida Ahmed (Karachi, 2002).

Void for Uncertainty?


A agrees to sell to B "a hundred tons of oil.
A agrees to sell to B one hundred tons of oil of a specified
description, known as an article of commerce.
A, who is a dealer in coconut-oil only, agrees to sell to B
"one hundred tons of oil.
A agrees to sell to B "my white horse for Rupees five
hundred or Rupees one thousand."

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