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Q. Discuss briefly expressly declared void agreements under the Contract Act 1872.
Introduction:
Void agreements are those agreements which do not create legal relations between the parties. Breach of a void agreement does not provide legal remedy to injured party because it is void from beginning.
Section 2(g) says that “an agreement not enforceable by law is void.”
An agreement must not be one of those that are express declared to be void by the law. (sec.10)
The void agreements are as follows:
1. Agreements under mistake of fact:
Under section 20 “where both the parties to an agreement, are under a mistake as to matter of fact essential to the agreement, the agreement is void”
Example: A agrees to buy a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void.
2. Unlawful object and consideration:
Section 24 states, “if any part of a single consideration for one or more objects, or any part of several considerations for a single object is unlawful, the agreement is void”
In simple words any agreement that involves unlawful consideration or object is void.
Example: A agrees to kill Z on behalf of B for one kg heroine.
3. Agreement without consideration:
An agreement without consideration is void with some exceptions under section 25. “Agreement without consideration is void unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law.”
Example: A agrees to give his car to B without consideration. The agreement is void.
4. Agreement in restraint of marriage:
Section 26 says, every agreement in restraint of the marriage of any person, other than a minor is void.”
An agreement to marry some person has no legal remedies and no person can be bound for this purpose because this is a social agreement. Parents of a minor person can stop him
Example: Asif agrees with B that she will not marry U. It is a void agreement.
5. Agreement in restraint of trade:
An agreement that interferes with a person’s right to engage him in a lawful business, trade, occupation or profession is called an agreement 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 is void” (sec.27)
Example: APL company agrees with Seeking Cargo to close its operations in Karachi for an amount of Rs. 10000. It is a void agreement because it is in restraint of trade.
Exception to the rule “All agreements in restraint of trade are void”
- Sale of goodwill. When a seller of goodwill agrees with the buyer to refrain from carrying on a similar business within specified local limits, shall be valid provided the limits are reasonable.
- Exception under Partnership Act.
- A partner shall not carry on any business other than that of the firm while he is a partner.
- A retiring partner may make an agreement with his partners that he will not carry on similar business to that of the firm within a specified period or specified local limits.
- Any partner may, upon the sale of the goodwill of the firm, make an agreement with the buyer that such partner will not carry on any business similar to that of the firm within specified period or specified local limits.
- Partners may, upon or in anticipation of the dissolution of the firm, make an agreement that some or all of them will not carry on a business similar to that of the firm within specified period or specified local limits.
- Service Contracts: Agreements of service often contain negative covenants
preventing the employee working elsewhere during the period covered by the . agreement
- Business Combinations:
Agreements among businessmen to reduce cost and enhance profit by regulating prices, output, advertising and other factors, are valid. But combinations which are against the public interest are void.
6. Agreement in restraint of legal proceedings:
Sec.28 says,” Every agreement by which any party is restricted absolutely from enforcing his right under a contract, by the usual legal proceedings in the ordinary Tribunals, or which limits the time within which he may enforce his rights, is void to that extent.
Example: A and B are parties to a contract. Both agree that in case of breach of contract, they would not go to court. This is a void agreement.
Exceptions.
1.Tthe parties may agree that in case of dispute
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