Not all agreements are enforceable under Indian law. Sections 26 to 29 of the Indian Contract Act, 1872, define certain types of agreements that are expressly declared void. Here’s a simplified and case-backed overview of these sections:
Table of Contents
- 💍 Section 26 – Restraint of Marriage
- 💼 Section 27 – Restraint of Trade
- ⚖️ Section 28 – Restraint of Legal Proceedings
- ❓ Section 29 – Uncertain Agreements
- 🧠 Quick Summary
SECTION 26: RESTRAINT OF MARRIAGE
“Every agreement in restraint of the marriage of any person, other than a minor, is void.”
➤ Key Principle: Marriage is a personal right, and no one can be restricted from marrying except in the case of a minor.
Case: Lowe v. Peers [(1768) 4 Burr 2055]- A man promised not to marry anyone other than Mrs. Lowe, or pay her £2000 if he did. The court held the agreement void as it was against public policy.
SECTION 27: RESTRAINT OF TRADE
“Every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is, to that extent, void.”
➤ Key Principle: No one should be unreasonably stopped from working or doing business.
Case: Superintendence Co. v. Krishan Murgai (AIR 1980 SC 1717)- An ex-employee was restrained from working in a similar business after his job ended. The court ruled the restraint void as it extended beyond employment.
Exceptions to Section 27:
- Sale of Goodwill: When there is sale of business by a person along with his goodwill, the seller of business may make a agreement with buyer not to carry on the business in competition with the buyer. Such agreement, if poses a reasonable restriction on the seller`s right to carry on business is valid.
- Trade Combinations: Agreements to regulate prices or reduce competition among traders is an exception to section 27.
- Contract of Service: An employee can be restricted from working elsewhere during employment.
Case-Charlesworth vs. MacDonald [ILR (1898) 23 Bom 103]- The defendant agreed to serve as an assistant to the plantiff, a physician and a surgeon at Zanzibar, for a period of three years and not to practice himself during that period. After one year, he left the plantiff`s service and started his own practice at Zanzibar. It was held that plantiff was entitled to restrain the defendant from practicing during the period of agreement in Zanzibar.
- Solus Agreements: There will be agreements in place where one party will only deal with the products of a specific manufacturer or producer and will not deal with anybody else. Such contracts are known as solus or exclusive dealing agreements. For example, a buyer of a certain commodity may decide to buy all of his necessities from a single producer, or vice versa. The goal of the parties determines the legality of such agreements. Such an agreement is lawful if it is reasonable for the advantage of the parties to the agreement; however, such an agreement is void if it tries to force unfair restrictions on the other party in order to monopoly trade.
SECTION 28: RESTRAINT OF LEGAL PROCEEDINGS
Section 28 of the Indian Contract Act, 1872 protects individuals’ rights to seek justice by declaring certain agreements void. It ensures that no party is unjustly deprived of their legal remedies. Agreements declared void under section 28 are as follows:
1️⃣ Agreements Absolutely Restraining Legal Proceedings- If an agreement completely restricts any party from enforcing their contractual rights through regular legal proceedings in a court of law, such an agreement is void.
Case: Tapash Majumdar vs. Pranab Dasgupta (AIR 2006 Cal 55)- In this case a rule in the East Bengal Club restricted members from going to court to challenge election procedures. The court held this rule to be contrary to Section 28 and hence, void.
2️⃣ Agreements Limiting Time for Legal Action- The Indian Limitation Act, 1963 prescribes time limits for filing suits. If an agreement imposes a shorter time limit than that provided under the Limitation Act, the agreement becomes void under Section 28.
Case: National Insurance Co. Ltd. vs. S.G. Nayak & Co. (1997)- In this case it has been held that an agreement which in effect seeks to curtail the period of limitation and prescribes shorter period than that prescribed by law would be void.
Exceptions to Section 28
- Contract to Refer Future Disputes to Arbitration: If parties agree to refer any future disputes to arbitration instead of court, such a clause is valid.
- Contract to Refer Existing Disputes to Arbitration: Parties may agree to refer disputes that have already arisen to arbitration by executing a written agreement. This too is considered valid.
- Guarantee Agreements by Banks or Financial Institutions: Section 28 does not apply to agreements by banks or financial institutions that limit the time to enforce a guarantee, provided the period is at least 1 year from the date of liability.
SECTION 29: UNCERTAIN AGREEMENTS
“Agreements, the meaning of which is not certain, or capable of being made certain, are void.”
➤ Key Principle: For a contract to be valid, it must be clear and definite.
Case:Pushpabala Ray v. LIC of India (AIR 1978 Cal 221)-In this case the remuneration of managing director of the company was in arrear, so a resolution was passed in the company to pay a sum of 26,000 to the managing director when the company is in a position to do so. This resolution was held to be void because of lack of certainity. In this case it is not certain when the payment will be made to the managing director.
QUICK SUMMARY
- 💍 Section 26: No one can be stopped from marrying (unless a minor).
- 💼 Section 27: Trade or job restrictions are void, with a few exceptions.
- ⚖️ Section 28: Agreements cannot block or shrink legal remedies unlawfully.
- ❓ Section 29: Vague contracts = Void contracts!
👉 These void agreements help preserve personal liberty, fair competition, and access to justice in India.
References:
- Indian Contract Act, 1872
- Law of Contract-I by R.K. Bangia
