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BL/U1 Topic 4 Void Agreements

Void means having no legal value and agreement means Arrangement, promise 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)]

Legal Position

A void agreement has no legal effect. An agreement which does not satisfy the essential elements of contract is void. Void agreement confers no rights on any person and creates no obligation.

Example of void agreement: An agreement made by a minor, agreement without consideration, certain agreements against public policy etc.

Agreement which become 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 became void the agreement ceases to have legal effect.

Expressly Declared Void Agreement

There are certain agreements, which are expressly declared to be void.

They are as follows:

(1) Agreement by a minor or a person of unsound mind [Sec (11)]

(2) Agreement of which the consideration or object is unlawful [Sec (23)]

(3) Agreement made under a bilateral mistake of fact material to the agreement [Sec (20)]

(4) Agreement of which the consideration or object is unlawful in part and the illegal part cannot be separated from the legal part [Sec (24)]

(5) Agreement made. Without consideration [Sec (25)]

(6) Agreement in restraint of marriage [Sec (26)]

(7) Agreement in restrain of trade [Sec (27)]

(8) Agreement in restrain of legal proceedings [Sec (28)]

(9) Agreements the meaning of which is uncertain [Sec (29)]

(10) Agreements by way of wager [Sec (30)]

(11) Agreements contingent on impossible events [Sec (36)]

(12) Agreements to do impossible acts [Sec (56)]

Some discussions on void agreement are as follows:

  • 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.

(2) Agreement Made Without Consideration:

An agreement made without consideration is void, unless

1)    it is expressed in writing and registered under the law for the time being enforce for the registration of(documents), and is made on account of natural love and affection between parties standing in a near relation to each other; or unless.

2) It is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promissory was legally compellable to do, or unless.

3) It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in the behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

(3) 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. However, an agreement restraint of the marriage of a minor is valid under the section.

It is interesting to note that a promise to marry a particular person does not imply any restraint of marriage and is, therefore, a valid contract.

(4) 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.” Thus no person is at livery to deprive himself of the fruit of his labor, skill or talent, by any contracts that he enters into.

It is to be noted that whether restraint is responsible or not, if it is in the nature of restraint of trade, the agreement is void always, subject to certain exceptions provided for statutorily.

(5) Agreement in restraint of legal proceedings:

Every agreement, by which any party thereto is restricted absolutely from enforcing his right 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. Section 28 declares the following two kinds of agreements void:

(a) An agreement by which a party is restrained absolutely from taking usual legal

Proceeding, in respect of any rights arising from a contract.

(b) An agreement which limits the time within which one may enforce his contract

Rights, without to the time allowed by the limitation act.

(6) 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.

(7) 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.

(8) 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 known on not to the parties to thr agreement at the time when it is made.” (Sec. 36)

(9) Agreements to do Impossible Act:

“An agreement to do an act impossible in itself is void.” (Sec, 56 Part-1)

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