VOID AGREEMENTS

Void agreements are those agreements which are not enforceable by law. Section 2(g) of the
Indian Contract Act defines Void Agreement as, “An agreement not enforceable by law”.
Thus the parties do not get any legal redress in the case of void agreements.

Void agreements arise due to the non-fulfilment of one or more of the conditions laid down
by section 10 of the Act.

Thus a void agreement does not give rise to any legal consequences and is ab-initio( such an
agreement is no agreement as it is non-existent in the eyes of law from its very inception.)

Expressly declared Void Agreements

Certain agreements have been expressly declared void by the Contract Act. They are as
follows:

1. Agreements made by incompetent parties

2. Agreements made under common and mutual mistake of fact
3. Agreements the consideration and object of which is unlawful
4. Agreements the consideration or object of which is unlawful in part
5. Agreements made without consideration
6. Agreements in Restraint of Marriage
7. Agreements in Restraint of Trade
8. Agreements in Restraints of Legal proceedings
9. Agreements the meaning of which is uncertain
10. Agreements to do an impossible act
11. Agreements by way of wager

1 Agreements made by incompetent parties: The following persons have been declared to
be incompetent by law to enter into an agreement. A minor, a person of unsound mind and
a person disqualified by law.

2 Agreements made under common and mutual mistake of fact

3 Agreements the consideration and object of which is unlawful is deemed to be unlawful

4 Agreements the consideration or object of which is unlawful in part: The agreements the
consideration and object of which is unlawful in parts are subject to the following rules. The
agreement in which the legal part can be separated from the illegal part then the legal part
is a contract and illegal part is void. Whereas the agreement in which the legal part cannot
be separated from the illegal part then the agreement is void.

5 Agreements made without consideration: Section 25 of the act declares that any
agreement made without a consideration is void.
6 Agreements in Restraints of Marriage: According to section 26 any agreement in restrain
of marriage of any person other than a minor is void.

7 Agreements in Restraint of Trade: The Constitution of India guarantees the freedom of

trade and commerce to every citizen and therefore Section declares, “every agreement by
which anyone restrained from exercising a lawful profession, trade or business of any kind
into that extent void.” Public policy requires that every man shall be at liberty to work for
himself, and shall not be at liberty to deprive himself or the state of his labour, skill talent by
any contract that he enters into.

Exceptions: An agreement in restraint of trade is valid in the following cases:

i. Sale of Goodwill: The seller of goodwill of a business can be restrained from

carrying on a similar business, within specified local limits, so long as the buyer or
his assignee carries on a like business provided it is regarded reasonable by the
court.
ii. Partners’ agreements: An agreement in restraint of trade among partners or the
buyer of a partnership firm’s goodwill is valid in the following cases:
- A partner may agree not to carry on any other business than that of the firm
so long as he is a partner.
- An outgoing partner may agree with his other partners not to carry on a
similar business to that of the firm within a specified time and local limits.
- An agreements among the partners that none of them, upon or on ceasing of
the firm carry on business similar to that of the firm within the same local
limits or specified time.
- Any partner may, upon the sale of goodwill of the firm, agree with the buyer
not carry on a similar business to that of the firm within a specified period or
local limits.
iii. Trade combinations: An agreement in the nature of a business combination
between combination between traders or manufacturers does not amount to a
restraint of trade and is perfectly valid. Agreements tending to create monopolies
is not valid.
iv. Negative stipulations in service agreements: An agreement of service restraining
an employee, during the term of employment, not to compete with his employer
are valid.

8 Agreements in Restraints of Legal proceedings: Section 28 provides that an agreement

which tends to prevent the process of justice is void. Every agreement:

- An agreement by which a party is restricted absolutely from taking usual legal

proceedings, in respect of any arising from a contract.
- An agreement which limits the time within which one may enforce his
contract rights, without regard to the time allowed by the Limitation Act.
9 Agreements the meaning of which is uncertain: Section 29 provides that agreements, the
meaning of which is not certain or capable of being made certain, are void.

10 Agreements to do an impossible act: Section 56 provides that an agreement to do an act

impossible in itself is void. The law does not compel any person to do an impossible act.

11 Agreements by way of wager: According to Section 30 agreements by way 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 by the result of any wager, or entrusted to any person to
abide bt the result of any game or other uncertain even on which any wager is made.