Void Agreements

Introduction

Agreements have become an inseparable part of our daily lives today; we enter some or the other kind of agreement almost every day. It would not be wrong to say thereby that agreements play an immense role in governing our daily intercourse. It would be a mistake for someone to assume however, that all agreements are binding contracts and are afforded equal enforceability under the law.

Under the Indian Contracts Act, 1872

Pursuant to the provisions of the Indian Contracts Act, 1872 (hereinafter the “Act” or “enactment”) only agreements that are enforceable under the law are termed as contracts. Section 2 sub-section (g) of the enactment, simply defines a void agreement as an agreement that is not enforceable by law. Furthermore, Chapter II, Sections 24-30, under the enactment, prescribes in detail the various grounds which if satisfied may vitiate the enforceability of an agreement, thereby rendering such an agreement void. Let us now have a look at some of the grounds which renders an agreement void.

Unlawful considerations and objects in part

Section 24 of the present enactment prescribes that an agreement is void if the considerations and objects in part is unlawful –

“If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.

Illustration A promises to superintend, on behalf of B, a legal manufacture of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year. The agreement is void, the object of As promise, and the consideration for Bs promise, being in part unlawful.”

Thereby, according to the above-stated provision if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object pursuant to the agreement is unlawful, such an agreement is deemed by law to be void and thereby rendered unenforceable.

In the case of Alice Mary Hill v. William Clarke, where the appellant a married woman was promised a certain sum of money for living in adultery with the respondent and for looking after the respondent’s house given by him. The Court held that since the former portion of this transaction was not only illegal but also immoral under the law, the entire agreement was held by the Court to be void and thereby not enforceable.

Where there is absence of consideration

Section 25 of the present enactment prescribes that an agreement devoid of any consideration would otherwise be void unless certain circumstances are fulfilled –

  1. The agreement is entered into on account of natural love and affection

Section 25 sub-section (1) of the enactment states that –

“An agreement made without consideration is void, unless (1) it is expressed in writing and registered under the law for the time being in force for the registration of 1[documents], and is made on account of natural love and affection between parties standing in a near relation to each other […]”

In the case of Rajlukhy Dabee v. Bhootnath Mookerjee, the Hon’ble Court held that an agreement that is written and registered and is predicated on natural love and affection between the kindred is enforceable by law despite such an agreement being devoid of any consideration.

2. There is a promise to compensate a person who has already done something voluntarily

Section 25 sub-section (2) of the enactment states that –

“An agreement made without consideration is void, 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 promisor was legally compellable to do; or unless […]”

Thereby, according to the above-stated provision if the agreement is in pursuance of a promise to compensate either wholly or in part, a person who has done something voluntarily for the promisor, or something which the promisor was obliged to do by law, such an agreement is enforceable by law.

To exemplify, ‘Ashok’ voluntarily finds ‘Abhay’s’ ring and gives it to him. ‘Abhay’ promises to give ‘Ashok’ Rupees 1,000 as a reward for his voluntary act. This constitutes a legally binding contract despite it being devoid of any consideration.

The agreement is in restraint of marriage

Section 24 of the enactment prescribes that any agreement that is in restraint of any person’s (minors being an exception) marriage is void and thereby not enforceable by law – “Every agreement in restraint of the marriage of any person, other than a minor, is void.”

To exemplify, if ‘Girju’ the father of ‘Nikita’ holds out some inducements to ‘Abhay’ only so as to preclude ‘Abhay’ from joining ‘Nikita’ in matrimony, then such an agreement shall be considered a void agreement and thereby unenforceable under the law, if the parties involved in the aforementioned scenario are not minors.

In Shrawan Kumar Pappu v. Nirmala Mauji Lal, where the plaintiff petitioned the Court that as the defendant had promised to join him in matrimony thereby the defendant’s present marriage should be injuncted by the court. The Court dismissing the said petition held that the agreement was in restraint of marriage and thereby not enforceable.

The agreement is in restraint of trade

Section 24 of the enactment prescribes that any agreement by means of which any person is restrained from carrying out any business, profession or trade of any kind is pro tanto void.

“Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. […]”

In the case of Madhub Chander v. Raj Coomar Dass, wherein the defendant promised the plaintiff that he would pay him a certain sum of money, if the plaintiff closed his shop located in a specific locality. When the defendant failed to pay the promised sum, the plaintiff knocked the doors of the Court. The Court held that even though the restraint imposed in the instant case was partial (as it extended only to a specific locality) the plaintiff cannot recover the sum as the agreement was void due to it being in restraint of trade.

Conclusion

To summarize, if an agreement is enforceable by law, it is a contract, if an agreement is not enforceable by law the same is a void agreement. The Indian Contract Act, 1872, prescribes under Chapter II enumerates the various grounds which may render an agreement void. These include grounds such as unlawful considerations and objects in part, when there is no consideration pursuant to the agreement (with certain exceptions), when the agreement is in restraint of marriage, when the agreement is in restraint of trade.

Sources

  1. The Indian Contract Act, 1872, No. 09 Acts of Indian Parliament, 1872.
  2. Alice Mary Hill v. William Clarke, I.L.R (1905) 28 All. 266.
  3. Rajlukhy Dabee v. Bhootnath Mookerjee, (1900) 4 Cal WN 488.
  4. Shrawan Kumar Pappu v. Nirmala Mauji Lal, 2013(3) ALJ 651.
  5. Madhub Chander v. Raj Coomar Dass, (1874) 14 Beng. L.R. 76.
  6. Disha Mohanty, Void Agreements Under Indian Contract Act, 1872, IPleaders.in (Mar.10, 12:23 PM), https://blog.ipleaders.in/void-agreements/

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