In our daily routine, we enter into a contract either knowingly or unknowingly like when we book a cab to reach our destination. Here the cab driver has to drop us safely to our destination in return we give him money. It’s a type of contract. All agreements are contracts if they are made by the free consent of the parties, competent to convert for a lawful consideration and with a lawful object. According to section 2(h) of the Indian contract act, an agreement that is enforceable by law is a contract. When all the essentials are mentioned in section 10 of the Indian contract act then it becomes a valid contract. An agreement even though it possesses all the essential elements of a valid contract must not have been expressly declared void by any law in force in the country. A void agreement is not enforceable by law. Void agreements are defined in section 2(g) of the Indian contract act.
Agreements expressly declared to be Void
The following agreements are expressly declared void under the Indian contract act
- Agreements by incompetent parties
- Agreements under a mutual mistake of fact
- Agreements of which consideration and objects are unlawful
- Agreements of which consideration and objects are unlawful in part
- Agreements made without consideration
- Agreements in restraint of marriage
- Agreements in restraint of trade
- Agreements in restraint of legal proceedings
- Agreements the meaning of which is uncertain
- Agreements that are wager in nature
- Agreements to do impossible acts
Let us have a glance at some void agreements
Wager means betting. Section30 of the Indian Contract Act 1872 defines the wagering agreements. According to Section30 of the Indian Contract Act 1872 wagering agreements represent “An agreement between two parties under which money or worth of money payable by one party to another party on the happening or non-happening of a future uncertain event”. It is mainly based on an uncertain event because the event may be happening or non-happening. It is chance oriented. The wagering agreement is not enforceable in the court of law and it is void. However, it is also illegal in certain states of the country.
Eg: Gujarat and Maharashtra.
Eg: Mr. X and Mr. Y entered the wagering agreements. In this case, Mr. X promises to pay 1,000/- to Mr. Y, if there is rain on a particular Day And Mr. Y also promises to pay 1,000/- to Mr. X if there is no rain on the same particular day. Such agreements are known as wagering agreements.
The following are the essential elements of wagering agreements:
1. Wagering agreements are mainly based on a promise to pay money or worth of money.
2. The performance of a promise mainly depends upon the happening or non-happening of a future uncertain event. It means the event may be happening or not happening in the future but the parties to the contract are not aware of the result of the event.
3. In the wagering agreement each party to the contract must stand to win or lose upon the future uncertain event.
4. Neither party to the contract should have control over the happening of the event one way or any other way.
5. Neither party should have an interest in the happening or non-happening of the future uncertain event.
1. An agreement to control the differences between the contract price and market price of certain goods on a particular day.
2. A lottery is a wagering agreement. However, if the lottery agreement is approved by the government in a particular state, the agreement is not wagered.
3. An agreement to buy a lottery ticket.
An agreement by way of wager is void in India. An agreement by way of wager has been declared illegal in the states of Maharashtra and Gujarat. In the case of a wagering agreement, the party who won the case or bet, or event cannot recover the amount by filing a case in a court of law.
Section 29 of the Indian contract act defines agreements, the meaning of which is not certain, or capable of being made certain are void. For example, A agrees to sell 20 bags of rice to B for 2000 per bag. Here the kind of rice which is sold is not clear. It may be basmati rice or sona masuri rice, due to uncertainty of subject matter the agreements become void.
Mutual mistake of fact
Ignorentia facti excusat which means ignorance of fact excuses. Under section 20 of the Indian contract act, a contract is said to be void when both the parties to the agreement are under a mistake as a matter of fact. For example, Ruksana agreed to buy a car from Mumtaz. Based on the letter sent by Mumtaz the price of the car mentioned 50,000 instead of 5,00,000 rupees due to some typing error. Ruksana sent 50,000 rupees and asked for a car as she fulfilled her part of the obligation. The agreement is considered to be void as there is a mistake on both sides of the parties regarding the price.
Agreement in restraint of marriage
Every agreement in restraint of marriage of any person other than a minor is void. For example, A married woman was given money to enable her to obtain a divorce from her husband. So that the lending person and the woman get married. Such agreements are void.
Agreement in restraint of trade
According to section 27 of the Indian contract act, every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void.
Agreements in which a part of consideration or object is unlawful
According to section 24 of the Indian contract act, 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.
For example, Kavya promises to supervise on behalf of Shyam, a legal producer of opium and illegal traffic in other articles. Shyam promises to pay Kavya a salary of 20,000 rupees a year. The agreement is void, the object of kavya’s promise and the consideration for Shyam’s promise being in part unlawful.
If you cannot separate the illegal from the legal part of a covenant the contract is altogether void, but where you can separate the illegal from the legal part then you may reject the bad part and retain the good.
Agreements in restraint of legal proceedings void
It is one by which any party thereto is restricted absolutely from enforcing his rights under a contract through a court or which abridges the usual period for starting legal proceedings is void. Section 28 of the Indian contract act deals with agreements in restraint of legal proceedings. There are some exceptions if the parties agreed to resolve the dispute through arbitration.
From the above information, it can be easily understood that a contract becomes void when it contravenes the law or statute in the country. There are some exceptions even. The agreements which fall under sections 24 to 30 of the Indian contract act are void.
- Contract and Specific Relief by Avtar Singh, 12th edition
- Elements of Mercantile law by N D Kapoor
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