The agreements which are not enforceable by law are said to be void agreements. As such, a void agreement does not give rise to any legal consequences and is void ab-initio i.e. from the very beginning. Such agreements are not treated as agreements at all in the eyes of law right from their very inception.
Expressly declared void agreements.
This is one of the essentials of a valid contract that it must not be one of the agreements expressly declared to be void by the Act. Such agreements which are expressly declared void by the Indian Contract Act, are the following:
(1) Agreements in restraint of marriage. (Section 26)
(2) Agreements in restraint of trade. (Section 27)
(3) Agreements in restraint of legal proceedings. (Section 28)
(4) Agreements the meaning of which is uncertain. (Section 29)
(5) Agreements by way of wager or wagering agreements. (Section 30)
(6) Agreements contingent on impossible events. (Section 36)
(7) Agreements to do Impossible Acts. (Section 56)
The above agreements are declared void ab-initio and not illegal, and therefore, transactions collateral to such agreements are not made void. But in case of illegal agreements, transactions collateral to them are also tainted with illegality and hence are void.
1. Agreement in Restraint of Marriage (Section 27) :
Each and every person enjoys the freedom to marry and as such according to this Section, "every agreement in 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. As such an agreement not to marry at all or not to marry with a certain person or a class of persons, or for a fixed period, is void. But an agreement preventing the marriage of a minor is valid under this section.
Illustration: Miss 'A' agrees with 'B' for good consideration that she will not marry with 'C'. It is a void agreement.
2. Agreement in Restraint of Trade : Since the constitution of our country allows the freedom of trade and commerce, so every citizen who enters into an agreement in restraining from exercising a lawful business or profession or trade of any kind is void. Thus no person is at liberty to deprive himself of the fruit of his labour, skill or talent by any contracts he enters. It must be seen whether the restraint is reasonable or not.
Illustration: An agreement by one of the parties to close his business in consideration of certain sum of money, is void. But agreements merely restraining freedom of action necessary for carrying on of business are not void.
Exceptions: An agreement in restraint of trade in the following cases are not void i.e. they are valid:
(i) In case of sale of Goodwill: The seller of goodwill can be restrained from carrying of similar business within specified limits for specified duration of time.
(ii) In case of partnership business: An agreement in restraint of trade among partners or between any partner and the buyer of firm's goodwill does not make the agreement void. It is a valid agreement. It includes (i) an agreement between the partners not to carry on business other than the firm's business, (ii) that retiring partner shall not carry on firm's business, (iii) that some or all the partners shall not carry on firm's similar business within specified duration of time, in case of dissolution, (iv) that on selling goodwill, the firm will not carry on such business for a specified time etc.
3. Agreement in Restraint of Legal Proceedings (Section 28) : The following agreements are declared void:
(i) An agreement by which a party is restricted absolutely from filing legal proceedings in respect of rights arising from a contract.
(ii) An agreement limiting the time within which one m enforce his rights in respect of a contract.
(iii) An agreement which forfeits the rights arising from contract.
4. Uncertain Agreements (Section 29): Any agreement, the meaning of which is not certain or capable of being made certain are void.
Illustration: 'A' agrees to sell 'B', 100 tonnes of oil at a certain price. There is nothing whatever to show what kind of oil was intended. The agreement is void because of uncertainty.
5. Wagering Agreements (Section 30): This section lay down that agreements by way of wager are void and no suit shall b brought for recovering anything alleged to be won by way of wager o betting. Wager means something stated to be lost or won on the result of a doubtful issue. It means these are ordinary betting agreements.
Illustration : 'A' and 'B' mutually agree if it rains on a particular day, 'A' will pay Rs. 100 to 'B' and if it does not rain on that day. 'B' with pay Rs. 100 to 'A'. It is a wagering agreement and hence void.
Agreements for sale and purchase of any commodity or share market transactions in which no delivery of goods or securities are given or taken are also wagering agreements.
Similarly, a lottery business being a game of chance is also a wagering transactions. Similarly crossword puzzles where prize depends upon a chance is also a wagering business. But the insurance contracts are valid contracts even they provide for payment of money by the insurer on the happening of some future events.
6. Agreements to perform Impossible Events (Sec. 36): Contingent agreements to do or not to do anything which is an impossible event happen, are void agreements, whether the impossibility of the event is known or not to the parties at the time the agreement is made.
Illustration : 'A' agrees to pay Rs. 1,000/- to 'B' as a loan if two straight lines should enclose a space. It is a void agreement.
7. Agreements to do Impossible Acts (Section 56): If them is any such agreement to do an impossible act, it is void.
Illustration : 'A' agrees with 'B' to run with a speed of hundred kilometers per hour or 'A' agrees with 'B' to discover treasure by magic are the examples to do impossible acts. Hence these agreements are void.
Thus, it is clear that the aforesaid agreements have been declared void by the Indian Contract Act. As such, these agreements are void ab-initio. (From the very beginning) but not illegal.
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