Business legislation

A Presentation on
VOID AGREEMENT

Guided by-Prof. Mrityunjay Pandey Presenter- Arun ojha

 Why we need law?

 In the state of nature...all men are

born equal, but they cannot continue
in this equality. Society makes them
lose it, and they recover it only by
the protection of the law.
[Abraham lincon]
Learning Objectives

 Definition
 Expressly declared void agreement
under Indian contract act with
examples
 Conclusion
 Reference

3
 Definition
 Literally:
Void means having no legal value and
Agreement means arrangement , promises, or
contract made with somebody. So void
agreement means an agreement that has no
legal value.

 Traditionally:
“An agreement not enforceable by law is said
to be void”. [Sec 2(g)]
Example

 An agreement made by a minor, agreement

without consideration, certain agreements
against public policy etc.
Agreement which becomes void

 An agreement, which was legal and

enforceable when it was entered in to,
may subsequently become void due to
impossibility of performance, change of
law or other reason. When it become
void the agreement ceases to have legal
effect
 Expressly declared void
agreements
 Agreement by a Minor Or a Person of Unsound Mind.

A person who has not completed his or her 18 years of age

signifies as minor. Law acts as the guardian of minors and
protects their rights, because their mental facilities are not
mature- they do not possess the capacity of judge what is
good and what is bad for them. Accordingly, where is a
minor charged with obligations and the other contracting
party seeks to enforce those obligations against the minor,
the agreement is deemed as void.
A person who does not possess a sound mind or whose
mental powers are not arranged or whose mental condition is
not under his or her own control. Any agreement by person
of unsound mind is absolutely void because he has no
capacity to judge, what is good and what is bad for him.
 Agreement by a Minor Or a Person of
Unsound Mind. (Cont…)

 Illustration

(a) A, 15 years old boy, made an agreement

with B to give him Tk.1000. This is a void
agreement.

(b) A mentally disordered man made an

agreement with X to marry her, but this is not
a valid agreement.
 Agreements in Restraint of
Marriage
 Every individual enjoys the freedom to marry
and so according to section 26 of the contract
act “every agreement is restraint of the
marriage of any person, other than a minor, is
void.” The restraint may be general or partial
but the agreement is void, and therefore, an
agreement agreeing not to marry at all, or a
certain person or, a class of persons, or for a
fixed period, is void
 But it should be noted that a promises to
marry a particular person is not a restraint and
therefore it is a valid contract
 Agreements in Restraint of
Marriage (Cont…)

 Illustration

(a) A agrees with B for good consideration that

she will not marry C. It is a void agreement.

(b) A agrees with B that she will marry him

only; it is a valid contract of marriage
Agreement in Restraint of Trade

 The constitution of India guarantees that

the freedom of trade and commerce to
every citizen and therefore section 27
declares “every agreement by which any
one is restrained from exercising a lawful
profession, trade or business of any kind, is
to that extent void.” In other words , every
person have liberty to choose and run any
legal trade or profession.
Agreement in Restraint of
Trade (Cont…..)
 Illustration

 An agreement whereby one of the parties agrees to

close his business in consideration of the promise by
the other party to pay a certain some of money , is
void, being an agreement is restraint of trade, and
the amount is not recoverable, if the other party fails
to pay the promised some of money.
But agreements merely restraining freedom of action
necessary for the carrying on of business are not void,
for the law does not intend to take away the right of a
trade to regulate his business according to his own
discretion and choice.
 Agreement in restraint of legal
proceedings.

 An agreement by which a party is restricted

from taking a legal proceedings in respect of
any of his right is declared void. Similarly
agreement by which the time limit within
which one agreement provide that no party
shall go to a court of law in case of any
dispute or breach of contract. Then such an
agreement is void.
 Agreement in restraint of legal
proceedings (Cont…)

 Illustration

X and Y enters into a contract of supply of certain

goods. There was condition that if X failed to supply
goods , Y would have no rights to file any suit
whatsoever. This agreement is void.
Uncertain Agreements
 Agreements, the meaning of which is not
certain, or capable of being made certain,
are void” (Sec-29). Through Sec-29 the law
aims to ensure that the parties to a
contract should be aware of the precise
nature and scope of their mutual rights and
obligation under the contract. Thus, if the
word used by the parties are or indefinite,
the law cannot enforce the agreement.
 Uncertain Agreements (Cont…)
 Illustration

 A agrees to sell to B “a hundred tons of oil.” There is nothing whatever

to show what kind of oil was intended. The agreement is void for
uncertainty.
 A who is dealer in coconut oil only, agrees to sell to B “a hundred tons if
oil.” The nature of A’s trade affords an indication of the meaning of the
words, and A has entered into a contract   for the sale of one hundred
toms of coconut oil.
  A agrees to sell to B “one thousand mounds of rice at a price to be fixed
by C.” As the price is capable of being made certain, there is no
uncertainty here to make the agreement void.
  A agrees to sell to “his white house for rupees five hundred or rupees
one thousand.” There is nothing to show which of the price was to be
given. The agreement is void.
 Wagering Agreement
 Literally the word ‘wager’ means ‘a bet’ something
stated to be lost or won on the result of a doubtful
issue, and, therefore, wagering agreements are
nothing but ordinary betting agreements. Thus
where A and B mutually agree that if it rains today
A will pay B Tk.100 and if it does not rain B will
pay A Tk.100 or C and D entered into agreement
that on tossing up a coin, if it fall head upwards C
will pay D Tk.50 and if falls tail upwards D will pay
C Tk.50, there is a wagering agreement.
 Essential elements Wagering
Agreement.

 There must be a promise to pay money or money’s

worth.
 The promise must be conditional on an event
happening or not happening.
 The event must be uncertain one. If one of the
parties has the event in his own hands , the
transition is not a wager.
 Each party must stand to win or lose under the
terms of agreement. An agreement is not a wager if
one party may only win and can not lose. or if he
may lose but can not win.
 Agreement Contingent on
Impossible Events

 “Contingent agreements to do or not to do

anything if an impossible event happens are
void, whether the impossibility of the event
is know on not to the parties to thr
agreement at the time when it is made.”
(Sec. 36)
 Agreement Contingent on
Impossible Events (Cont…)

 K agrees to pay Rs.5000 to L if the sun

will rise from west. The agreement is void
because it is impossible.
 A agrees to pay B Rs.1000 (as a loan) if B
will marry A’s daughter, C. C was dead at
the time of the agreement, the agreement is
void.
Conclusion

 A void agreement has no legal effect. An

agreement which does not satisfy the
essential elements of contract is void.
Void contract confers no rights on any
person and creates no obligation.
Reference
 http:// reportbd.com
 http://en.wikipedia.org/wiki/Void_con
tract
 Law, ethics ,and communications by
ICAI
 Honorable Mrityunjay sir
Two words prayer