VOID AGREEMENTS

Prof. Bhushan Ahire

 introduction
• What is ‘void agreements’?
• Sec- 2 (g)“An agreements not enforceable by
law is said to be void.”
Sec- 2 (h)“An agreements enforceable by
law is a contract.”
• Some agreements are not enforceable because they lack
certain essential requirements of contract, like free consent,
capacity of parties, lawful object, lawful consideration etc..
• Some agreements are not enforceable because they are
declared to be void, these agreements are not enforceable
even if they qualify all other essential requirements of
contract, like free consent, capacity of parties, lawful object,
lawful consideration etc..
 introduction
• Sec. 10- what agreements are contracts.
• “All agreements are contracts if they are made
by the free consent of parties competent to
contract, for a lawful consideration and with a
lawful object, and are
not hereby expressly declared to be void.
• Nothing herein contained shall affect any law in
force in India and not hereby expressly repealed
by which any contract is required to be made in
writing or in the presence of witnesses, or any law
relating to the registration of documents.
 agreements which are void

• agreements which are void,-

• Agreements by a person incompetent to contract.
{Sec. 11}
• Agreements made under a bilateral mistake of
fact. {Sec. 20}
• Agreements of which consideration or object is
unlawful. {Sec. 23}
• Agreements of which consideration or object is
unlawful in part. {Sec. 24}
• Agreements made without consideration.{Sec. 25}
 agreements which are voidable

• agreements which are voidable,-

• Agreements made under coercion {Sec. 19}

• Agreements made under undue influence {Sec. 19A}
• Agreements made under fraud {Sec. 19}
• Agreements made under misrepresentation {Sec. 19}
agreements expressly declared void
• agreements which are declared to be void,-
• Agreements in restraint of marriage. {Sec. 26}
• Agreements in restraint of trade. {Sec. 27}
• Agreements in restraint of legal proceedings.
{Sec. 28}
• Agreements the meaning of which is uncertain.
{Sec. 29}
• Agreements by way of wager. {Sec. 30}
• Agreements contingent on impossible events.
{Sec. 26}
• Agreements to do impossible acts. {Sec. 56}
 agreements in restraint of marriage

• agreements in restraint of marriage void,-

• Sec. 26- “Every agreement in restraint of the
marriage of any person, other than a minor, is
void.”
agreements in restraint of marriage
• agreements in restraint of marriage void,-
• But an agreement restraining
the marriage of a minor is valid.
agreements in restraint of marriage
• the restraint may be general or partial- the
agreement is void.

• General restraint

Partial restraint Lowe v. Peers

agreements in restraint of marriage

positive promise valid and

to marry enforceable
 agreements in restraint of trade
• agreements in restraint of trade void,-
• Sec. 27- “Every agreement by which any one is
restrained from exercising a lawful profession,
trade or business of any kind, is to that extent
void.”

Madhub Chander v. Rajkumar Dass

One person close his business
 agreements in restraint of trade
EXCEPTIONS
• Sale of Goodwill: a seller of goodwill may be restrained from
carrying on (i)a similar business, (ii)within specified local limits, (iii) so
long as the buyer carries on a like business: provided (iv) that such,
limits appear to the Court reasonable regard being had to the nature of
the business.

• Partners Agreement: i. Amongst the Partners ii. Retiring

Partner iii. On dissolution of Partnership iv. Sale of Good Will of
Partnership.
 agreements in restraint of trade
EXCEPTIONS
• Trade Combination: An agreement the primary
object of which is to regulate business and not to
restrain is valid.

• Service Agreement:
i] during service, valid
ii] after service- void
• Sole Agent’s or Distributors Agreement
agreements in restraint of legal proceedings

Sec. 28-“Every agreement,

a) 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.
•Baroda Spinning Co. Ltd V/s Satyanarayan
Marine & Fire Insurance Co. Ltd.
agreements in restraint of legal proceedings

Sec. 28-“Every agreement,

B) Which extinguishes the rights of any party
thereto from any liability, under or in respect of
any contract, on the expiry of a specified
period so as to restrict any party from
enforcing his right
is void to that extent.
•Baroda Spinning Co. Ltd V/s Satyanarayan
Marine & Fire Insurance Co. Ltd.
agreements in restraint of legal proceedings

• Applicable to only absolute restriction.

• Restrictions on legal proceedings.
• Curtailing period of limitation.
• forfeiture of any contractual rights, if suit is not
brought within a specified time.
• This Sec. applies to only rights arising from
contract. Not to cases of crime or tort.
• Does not affect the law relating to arbitration.
• Does not affect an agreement “not to file an appeal”
• Select one of the two courts.
agreements in restraint of legal proceedings

Sec. 28-“Every agreement,

a) 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.
•Baroda Spinning Co. Ltd V/s Satyanarayan
Marine & Fire Insurance Co. Ltd.
agreements the meaning of which is
uncertain.
• Sec. 29 Agreements void for uncertainty.-
“ Agreements, the meaning of which is not
certain, or capable of being made certain, are
void.”
 Agreements by way of wager

• Sec. 30 .Agreements by way of wager void.-

• “Agreements by way of wager are void; and no
suit shall be brought for recovering anything
alleged to be won on any wager, or entrusted to
any person to abide the result of any game or
other uncertain event on which may wager is
made.”
Agreements by way of wager
 Agreements by way of wager
• Definition of wagering Agreement,

• Carlill V/s Carbolic Smoke Ball Co.- Hawkins, J

•“A wagering agreement is one by which two persons
professing to hold opposite views touching the issue of
a future uncertain event mutually agrees that,
dependent upon the determination of that event, one
shall win from the other, and the other shall pay or
hand over to him, a sum of money or other stake,
neither of the contracting parties have any other
interest in that contract.”
Agreements by way of wager
 Agreements by way of wager
Essentials of a wagering agreement
(1)There must be a promise to pay money or money’s
worth.
(2)The promise must be conditional on an event
happening or not happening.
(3)The event must be uncertain one. If one of the
parties has the event in his own hands, the
transaction is not a wager.
(4)Each party must have a equal chance to win or to
loose.
(5) No other interest in the event except the amount of
 Agreements by way of wager
Important points
1. Any horse races.
2. Lottery. {In Shekharchand Jain v. Ramnarayan (1977)} though a State
Lottery is not illegal, the same is nonetheless in the nature of wager, and,
therefore, void. Hence, a person declared winner of prize money on lottery
cannot sue for the recovery of the prize money.
3. Crossword competitions (skill/merits).
4. Games of skill, e.g., picture, puzzles or athletic
competitions:
5. A contract of insurance.
6. Share market transactions.
Agreements Contingent on Impossible Event

• 6. Agreements Contingent on Impossible Event

(Sec.36)
• “Contingent agreements to do or not to do
anything, if an impossible event happens, are
void, whether the impossibility of the event is
known or not to the parties to the agreement at
the time when it is made.”
 Agreements To Do an Impossible Act

• Agreements Contingent on Impossible Event

{Sec.56}
• “An agreement to do an act impossible in itself
is void.”
 Thank You…

God, for the world so beautiful