Void agreements Intro 2

Reasons why the agreement might be declared void 3

Important case laws 2

Important acts 2

Bibliography
INTRODUCTION
Void agreements are those agreements which are not enforceable by
law courts. Section 2(g) of the Indian Contract Act defines a void
agreement as, “an agreement not enforceable by law”. Thus the parties
to the contract do not get any legal redress in the case of void
agreements.

There are several reasons why an agreement might be declared void,

for example – an agreement in restraint of trade is void , an agreement
by a minor is void.

Void Contract means that a contract does not exist at all. The law can
not enforce any legal obligation to either party especially the
disappointed party because they are not entitled to any protective laws
as far as contracts are concerned. An agreement to carry out an illegal
act is an example of a void contract or void agreement. For example, a
contract between drug dealers and buyers is a void contract simply
because the terms of the contract are illegal. In such a case, neither
party can go to court to enforce the contract.

The concept of void agreement was developed to regulate the

application of contract and to control abuse of contract law.

To understand void agreement we must first understand what is an a

contract . A Contract is an agreement; an agreement is a promise and a
promise is an accepted proposal. Thus, every agreement is the result of
a proposal from one side and its acceptance by the other. However
when this agreement is made by a minor or the agreement in restraint
of trade or restraint of marriage the agreement is said to be void.

A void agreement is defined in The Indian Contract Act , 1872. However

the Contract Act does not purport to codify the entire law relating to
contracts, the Act also specifically preserves any usage or custom of
trade or any incident of any contract not inconsistent with the
provisions of the Act. The law of contract confines itself to the
enforcement of voluntarily created civil obligation. The law of contract
is not able to take care of the whole range of agreements, Many
agreements remain outside the purview because they do not fulfill the
requirement of a contract.

The reasons why a contract may be declared void are-

 Void due to the impossibility of its performance

 Any agreement with a bilateral mistake is void.(Section 20)
 Agreements which have unlawful consideration and objects are
void.(Section 23 & 24)
 Agreements made without consideration is void.(Section 25)
 Agreement in restraint of marriage of any major person is void
(Section 26)
 Agreement in restraint of trade is void. (Section 27)

The above stated reasons are accompanied by exceptions such as an

agreement for sale of goodwill for example A is book seller and his
brand A Enterprises is renowned name in the book business. Suppose B
purchases the business (A enterprises) from A, in the purchase
agreement there can be clause which prevents A from starting a similar
business or a business in the same industry for a specified period of
time (say 2 years). This will not be considered an agreement in restraint
of trade as the section 27 of the Indian Contact Act which is that
relating to sale of goodwill states that – “One who sells the goodwill of
the business may agree with the buyer to refrain from carrying on a
similar business , within specified local limits , so long as the buyer , or
any person deriving the title to the goodwill from him , carries on a like
business therein Provided that such limits appear to the court
reasonable”

A void agreement means neither party can enforce the contract when it
was formed, as the contract had never been created. Therefore, neither
party can enforce any rights or perform any obligations set out in the
contract.
DIFFERENCE BETWEEN VOID
AGREEMENT, VOID
CONTRACT AND VOIDABLE
CONTRACT
Void agreements, void contacts and voidable contracts are closely
linked terms having similar meanings and thus are often confused.

A void agreement is defined under section 2(g) of Indian Contract Act,

1872, as an agreement which cannot be enforceable by law, i.e. such
agreements cannot be challenged in the court of law. Such an
agreement lacks legal consequences, and so, it does not confer any
rights to the parties concerned. A void agreement is void from the day,
it is created and can never turn into the contract.

Section 2 (j) of the Indian Contract Act, 1872 defines Void Contract as a
contract that no longer remains a valid contract and cannot be
enforced in the court of law. Such contracts do not have any legal effect
and cannot be enforced by either party.

Void contracts are valid, when they are entered into, as they conform
to all the conditions of enforceability, laid down under section 10 of the
act and are binding on the parties, but later on become void because of
impossibility to perform.
CAUSES OF VOID AGREEMENTS

As per Section 2(g) of The Indian Contract Act , 1872 “An agreement not
enforceable by law is said to be void”, and as per Section 2(j) of The Act
“A Contract which ceases to be enforceable by law becomes void when
it ceases to be enforceable”. Thus Void Contracts can be of following
two types:-

(i) Void ab initio :- void-ab-initio i.e. unenforceable from the very

beginning