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What Constitutes a void Contract?

A void agreement is one which can’t be enforced by law. Sometimes, settlement which is enforceable by way of law, a agreement, can grow to be void. Legal settlement that is correctly unlawful and unenforceable from the instant it’s far created. A void contract varies from a voidable contract because, at the same time as a void agreement is one that turned into in no way legally valid to start with and will never be enforceable by means of regulation, voidable contracts may be legally enforceable once underlying contractual defects are corrected. At the equal point, void contracts and voidable contracts may be nullified for comparable reasons. A contract can be don’t forget void if the agreement isn’t always enforceable because it changed into at the beginning written. In such case, agreements involve that are both unlawful in nature or in violation of fairness on public policy. Void agreements are specific from voidable agreement, which might be contracts that can be nullified. However, whilst a settlement is being written and signed, there’s no automatic equipment to be had in each scenario that may be used to discover the validity or enforceability of that contract. Practically, a settlement can be declared to be void with the aid of a court of law. A contract can also be void due to the impossibility of its overall performance.

For example, if a settlement is formed between two parties A & B but throughout the overall performance of the settlement the object of the contract turns into not possible to gain then the agreement can’t be enforced inside the courtroom of law and is accordingly void. A void agreement may be one in which any of the conditions of a valid agreement is/are absent as an instance if there’s no contractual capacity, the settlement can be deemed as void.

 In reality, void means that a agreement does not exist in any respect. The law can’t implement any felony duty to either party specially the upset celebration because they’re now not entitled to any protecting legal guidelines as far as contracts are involved. These agreements are generally the ones that are concerned with immoral elements or pass in opposition to the general public rules of the nation. Section 2(g) of the Indian Contract Act, 1872 defines void agreements. Further, Sections 24 to 30 and fifty six of the Act specify the precise types of agreements/contracts which might be void. Since a void settlement is meaningless within the eyes of law, it does no longer cause any change inside the function or relationship of the contracts.

An agreement to carry out an illegal act is an instance of a void agreement. For example, A settlement among drug dealers and customers is a void settlement actually because the terms of the settlement are unlawful. In the sort of case, neither birthday celebration can visit court docket to implement the agreement. A void settlement is void Ab initio, i.e. From the beginning at the same time as avoidable settlement may be voidable through one or all the parties. A voidable settlement isn’t void ab initio, as an alternative, it becomes void later because of some adjustments in circumstance. In sum, there’s no scope of any discretion on the a part of the contracting events in a void agreement. The contracting parties do not have the electricity to make a void agreement enforceable.

Sections comes under void contract

Agreements in which a part of consideration or object is unlawful

Under section 24 [1]of the act says, that the consideration, as a whole or in element is unlawful or if the end fabricated from the settlement is illegal then the agreement is said void. The agreement might, be considered valid after deleting the unlawful subsections. For example, if there is an settlement between X and Y for the exchange of drugs and medicinal herbs for ₹ten thousand, then the agreement is void despite the fact that the attention of the agreement is legal. This is because the item of the agreement is illegal. But, if we detach the drugs from the item then the agreement might be termed as a legitimate. Moreover, if transaction which arises out of an unlawful act is such that if they may be separated from the illegal component, then they might remember as a valid agreement, then those transactions preserve fee in the eyes of law ignoring of the illegality of the agreement.
Agreements without consideration

Section 25 [2]of the Indian contract Act 1872 agreement without consideration, it’s miles registered and writing or to compensate through promising or is a promise to pay debt barred by means of problem of regulation, this section defining after attention inside the definition clause sec. 2(d) broadcasts that consideration is the important a part of a legitimate contract additionally states that some deviations, the contract cannot be rendered void even if it without attention. The exceptions are: when the agreement is in registered and writing, whilst it is a promise , signed or made in writing by means of the individual or his agent to pay the whole a part of a debt . For examples: A concurs to promote his automobile well worth RS 50000 for RS 20000 to B. The agreement is lacking good enough attention however it’s not void. However, it is able to be taken into an account by the court docket to see either the consent become free or now not. Y promised without consideration to offer his automobile to Z, This is a void agreement. Because Y out of natural love and affection writes and promises and to sign up it to give his automobile to Z that is a settlement.

Restraint of marriage

Section 26 [3]of the Act says that, any agreement which interferes with the martial existence so other individual would be taken into consideration as a void agreement. This restrain may be marrying from a particular time frame or from marrying class of man or woman or precise character or from marrying at all or he can be restraint from. When an agreement has been entered into two co-widows that if either of them marries then the opposite character has ton for pass her share inside the deceased husband’s assets. The courtroom held that there has been no restraint of marriage of the agreement. That all must offer became if the widow chose to remarry she should should forgo her rights into the belongings. For instance, if Anita’s father offers Summit with a few incentives best to save you him from marrying his daughter, then such an agreement would stand for void inside the eyes of the regulation, provided the parties involved are not minors.   

Restraint of trade       

Under section 27 [4]of the Act. The freedom to implementation of any form of trade and occupation is a fundamental right guaranteed by the Constitution of India under Article 19(1). Hence, any agreement in restraint of trade and occupation would be consider as void. The control can be both partial and complete. In the case of Madhub Chander Poramanick v. Rajcommar Doss. The plaintiff and the defendant were the competition between business men. The defendant wanted to decrease the competition by offering a certain amount of money to the plaintiff so that he could close to the business in that society. So the plaintiff accepts that offer and he has closed his shop then after defendant refuse to pay the money. Plaintiff has filed suit against the defendant for the recovery of the amount stating this case won’t come under section 27 of the act as the restraint was only partial as he was asked to stop in one locality. The court held that the agreement was void and said that the restraints stated doesn’t always mean absolute. But also partial implies a limited place. 

Restraint of legal proceeding
Under section 28[5], says that in the case of breach of contract of any agreement that restricts an aggrieved party from implement his rights to precede a relevant court or tribunal or limits within the time which he may to do so, is a void agreement. These sections have three exceptions: Saving of contract to refer questions that have already arisen, saving of a guarantee agreement of a bank or a financial institution, saving of contract refers to arbitration disputes that may arise. As per the limitation of Act any of the action of breach of contract is too filed within the 3 year from the date on which the breach has arisen.
Agreements void for uncertainty

Under section 29 [6]says that the agreement, whose meaning is not capable of being made certain are void. For example: X come into an agreement with Y where he says that deliver a certain amount of rice to his place of business. Now contract intended to be considered as a void one in a case Y has multiple sites of business then it creates confusion on the mind of Y concerning the delivery place. Another case is where a bike was brought from the seller for RS 50000 with supplying to earn more if the bike is found to be lucky. The agreement was considered as void.

By way of wager

Under section 30[7], an agreement to wager is void settlement, in a favor of positive prizes for horse racing. Its basically a wager among the 2 events where the primary party prognosticate that situation A will show up the other birthday celebration refuse that final results.  For instance: if a hockey fit goes among India and UAE, X says that UAE win and Y says that India will win. So in this case both X&Y are predicting the happening of some destiny unsure activities and if X wins Y should pay and vice-versa.  So contracts like are in these termed  as the gamble contract which can be considered as void.

Impossible Act

Under section 56,[8]says that agreement to do an act impossible in itself is void. For example: there had been  events X &Y, X had made a agreement with the Y for supplying certain items at an area out of doors the state of Madhya Pradesh whilst there has been no restrict in opposition to the sending of goods outdoor the kingdom. Later there are such restriction became inflicts and the railway reserving became closed and it remained so for a sizable time. Though that that is incredible prevail occasion has made the contract and discharged and impossible the defendant acting the contract.

CASE LAWS

KUJU COLLIERIES LTD. V. JHARKHAND LTD. AND OTHERS[9]

FACTS

Plaintiff entered into a contract for lease of coal mines from the defendant in lieu of consideration money (which changed into paid there after which); but, the deed became hit with the illegality below the act handed earlier than the agreement turned into made; since the hire of belongings was in no way conveyed to the plaintiff and the deed become void by the operation of regulation, he instituted the suit united states of america65 claiming that the law become unknown to him earlier than entering the contract and it became the case of “contract found to be void”.

Plaintiff to be in ignorance of law such that the deed became void ab initio and not finally discovered to be void. Since the plaintiff is to be imputed with the knowledge of regulation in gift situations, as a result the act of paying the attention cash could not be stated to be induced by means of ‘mistake’ as to regulation in force below the area of Seventy two such that plaintiff could not recover something.

Percept D’Markr (India) Pvt. Ltd. V. Zaheer Khan &Anr .

FACTS:

Defendant entered right into a contract for control of his media affairs with the plaintiff organization on the term that prior to the completion of first negotiation period and thereafter, plaintiff could have the ‘right of first refusal’ in regard to any offer for services of management of media affairs received via defendant; such that defendant can’t take delivery of any 0.33 celebration provide with out imparting plaintiff right to healthy the offer on identical terms and in plaintiff’s failing to achieve this. However, defendant entered into an settlement with 0.33 birthday party after the termination of the said agreement and plaintiff claimed permanent injunction.

Conclusion

After thoroughly analyzing the major sections related to void agreements, it can easily be conclude that the agreements which have been declared as a void and the inconsistency to them, are done and  only to protect the rights and interests of the public at large. The restrictions assume paramount importance as agreements and contracts are the most commonly used legal tools and directly or indirectly, affect most of our social relations. Agreement can unenforceable by law, thus it makes invalid. It can also be conclude that the Indian contract Act has tried to forbid which is either against the public policies or direct violation to the fundamental rights as prescribed in the Indian constitution. The Act is to promote and maintain legitimate relation between the parties but at the same time it’s important to confine such contracts.

Contracts and Agreements:

What constitutes a void contract with examples and case law.

Edited by: SAKSHI VISHWAKARMA

Collage Name: AJEENKYA D.Y PATIL UNIVERSITY (5th semester)


[1]Section 24 in The Indian Contract Act, 1872

[2]Section 25 in The Indian Contract Act, 1872

[3]Section 26 in The Indian Contract Act, 1872

[4]Section 27 in The Indian Contract Act, 1872

[5]Section 28 in The Indian Contract Act, 1872

[6]Section 29 in The Indian Contract Act, 1872

[7]Section 30 in The Indian Contract Act, 1872

[8]Section 56 in The Indian Contract Act, 1872

[9] Kuju Collieries LtdvsJharkhand Mines Ltdand Ors. AIR 1974 SC 1892

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