By Akanksha Sharma

Published on: September 2, 2021, at 14:35 IST


The Indian Contract Act was formed to give legal recognition to various forms of contracts as if there is any breach of contract by either of the parties the other one can seek a remedy from the Court of Law. And as we know that it’s because of the interest of both the parties that for fulfilling their interests they enter into a contractual agreement.

With the passage of time some contracts came to be regarded as Void contracts, as they were immoral and against the public policy. Contracts like restraining someone to trade and getting into marriage is against human rights which is a Void contract. The main criteria for a contract to be referred to void is that the contract never existed in the first place.

Hence, we can say that Void agreements are those which are not enforceable by Law. Section 2(g) of the Indian Contract Act defines an agreement as Void. Section 10 of the Act lays down the non-fulfilling conditions to arise such type of agreements.

Section 10 states “All agreements are contracts if they are made with free consent of parties competent to contract, for a lawful, consideration and with a lawful object which is not further declared to be void.”

What are the necessary conditions to make an agreement void?

Some of the conditions by which the parties to a contract shall make an agreement void is as follows:

  • There should be the free consent of the parties.
  • Parties should be competent to contract.
  • A lawful consideration should exist.
  • Existence of a lawful object must be there.
  • Agreement is not included in the list which is specially declared to be void by the Indian Contract Act under Sections 26, 27, 28, 29, 30 and 56.
  • Completing certain formalities which are required by any other countries law like transfer of Property Act, Company Act.

Agreements which are stated Void under the Indian Contract Act as per Sections. The Act has specified certain types of contracts from Section 24 to 30 & Section 56 as void contracts.

Section 24 – Agreement of Which the Consideration or the Object is not Lawful

This Section states that agreement shall be considered as a void agreement if the objective of the Contract on the whole is unlawful. It means that the whole contract is not regarded as void but only a part of it is regarded as the working is as such, if the unlawful clause can be served out from the contract, then only the whole contract cannot be termed as void. Also, the whole part can be termed as illegal if the unlawful clause cannot be separated from the legal part.

For example, if A promises B to pay Rs 5000 in return of working as a maid in his house and having an adulterous relationship with him. Hence here having an adultery relationship with A is considered to be unlawful which is further considered to be a void agreement but the rest of the contract is proceeded to be a valid one.

Section 25 – Agreement without Consideration

The agreement is void as per the Section if it falls under the following exceptions:

  • If the contract is based on love and affection

The first exception which comes under Section 25(1) is “contract based on love & affection”, where the contract which is in writing and registered is made out of love and affection by a party standing near relationships.

For example, in a case where contract is enforceable even if the consideration is not mentioned is a contract between a mother and a son that mother would provide money to son to buy his books. The ingredients for a contract like this are that the contract is made up because of love and natural affection, it is registered, it is in writing and the parties are in close relationship with one another.

  • Person has done something for the promisor already voluntarily

This exception under Section 25(2) means that in a contract like this consideration is compulsory as the person stands as a guarantee for any act done by the person who has done the act voluntarily. In such contracts, past consideration may be a good consideration.

Regarding the usage of this exception there was a conflict between Allahabad High Court and the Calcutta, Bombay High Court in the case of Suraj Vs Suku[i].

According to the Allahabad High Court it was held that consideration would not be applicable for the contract where the person attains the majority as the past consideration was held by a minor.

But Bombay and Calcutta High Court it was held that when the person attains majority then the consideration will become applicable. There are some conditions which are important to give effect to this exception as the act should be done voluntarily by the promisor and the promisor must be competent to contract.

  • Promise to pay the whole or part in the debt which the creditor might have enforced for the contracts falling under the limitation of the suits

Under Section 25(3) this exception comes which states that even when the contract is there to pay either the whole or a part of the amount which is signed by the debtor or his agent is enforceable. It is as this exception is not considered if the time- barred debt is paid by someone else other than the debtor himself.

For example, a widow pays the time barred debt of her husband, the transaction was not considered under this exception.

But if the deceased takes the loan from the bank, then that loan won’t be considered a promised to pay back the time barred debt.

Section 26 – Agreement in Restraint of Marriage

Any agreement which interferes with the marital life of a person shall be considered as a void agreement and is held under this section. This can either be a partial restraint or a general one in a party. All it needs to have is it shall be differentiated from imposing a penalty upon remarriage.

Further the penalty upon remarriage is not considered to be a restraint on marriage, hence in Rao Rani Vs Gulab Rani[ii]if an agreement is there between any two co- widows that if either of them marries then the other person has to go her share in the deceased husband’s property.

Hence the Court of Law holds that there was no contract with the restraint of marriage. All that was provided was if the widow chose to remarry she would have to let go off her rights into the property.

Section 27 – Agreement in Restraint of Trade

It states that agreement shall be considered as a void if any person exercises his right to undertake any profession or a trade. The freedom of trade and commerce is a fundamental right which is given by the constitution under Article 19(1)[8]. If any agreement is made to restrict person’s lawful right to do or adopt any lawful profession or business; this shall be against public policy and violation of his/her fundamental right. Hence Indian Contract Act has referred such agreements as void.

The basic principle of law is that every person shall have the freedom to work for his self-fulfilment. Furthermore, as legislature cannot take away the right of any individual similarly no individual can take away the right of other individual through the medium of any agreement. Sale of goodwill and Partnership Act are the two exceptions to this rule-

  • Sale of goodwill

This rule states that the person can impose certain restrictions to the seller when one person sells goodwill of his business to another person like restricting him from carrying same business in the same area.

  • Partnership Act

Section 36 of the Partnership Act gives permission to the partners to restrict the outgoing partner to open the same business and that too in the same locality only if the restrictions are reasonable.

Section 28 – Agreement in Restraint of Legal Proceedings

Under this Section a contract is considered as a void agreement as it restricts any party or a person from enforcing his right to a legal proceeding. Under the purview of this Section Right to appeal does not come under this. It is also held that the parties which enter into a compromise for the withdrawal of the suit, outside the Court does not come under this Section as no restraint is being placed.

An agreement by which a party is restricted from enforcing their rights in the Court of Law is considered void as it limits his/ her rights. Moreover, any agreement which is filed to shorten the period and restricts the time period than what has been prescribed under the Limitation Act 1963 is also considered as a void agreement. This Section also has certain exceptions-

  • Future Dispute to Arbitration

Under this Section both the parties come to a conclusion that arbitration and amount that is awarded will be recovered from the existing parties and any future disputes shall be resolved by referring the case.

  • Existing questions to the arbitration

Any clause which refers that the clauses can only be held valid if any existing question shall be decided by the arbitration.

Section 29 – Agreement which is Ambiguous and Uncertain

Under this Section those agreements shall be considered as void whose meaning can’t be made certain. For example, A and B enters into an agreement where A delivers certain amount of wheat to B’s business place. The contract shall be deemed here as void if B has multiple places for business which directly creates confusion in A’s mind for the address of delivery.

Another example where the contract could be termed as void is if a car of Rs 1,00,000 is brought from a seller if the car is lucky with the idea to earn more. Hence as lucky is a subjective term, the contract is found to be void.

Section 30 – Agreement by way of Wager

This Section states that when it generates some uncertain future events when two people enter into the contract. If the uncertain event happened then the first person will pay he pre-decided amount to the second person and if the event doesn’t happened the second person will pay the pre-decided amount to the first person. Some essential characteristics of this contract are as follows:

  • Uncertain Events

The main feature of a contract like this is the uncertain events. It may also be the past event of a person but parties to contract might be unaware of it. This is the foremost feature of a wagering contract.

  • Mutual Chances of loss or gain

In these types of contract there is no mutual chance of gain or loss but each party should have the chance to win or lose the bet.

  • Neither party to have a control over the event

None of the parties shall have any control over the outcome of an event, If such happens then it will not referred to the wagering contract.

  • No other interest in the event

None of the parties should have any other interest other then the feeling of wins or loses. This is only what differentiates insurance contract from a wagering contract.

Section 56 – Agreement to do an Impossible Task

This Section states that when the contract was entered if its objective wasn’t impossible but after some time the objective became possible then the contract isn’t necessary. Furthermore, if any contract which has been entered to do some impossible activity will consider as a void contract. The section talks about the Frustration of Contract. So, the contract could be frustrated in two types of situations:

  • First, where the performances are physically impossible
  • Second, where the objective of the Contract has failed.

Case Laws

  • M/S Gujarat Plotting Co. Ltd. Vs The Coca Cola Co. & Ors[iii]

Distribution of the goods of franchiser cannot be regarded as restraint of trade

It was held that such a condition requires franchisee not to deal with the competing goods is meant to facilitate distribution of the goods of the franchiser and it cannot be regarded as in restraint of the trade. Moreover as the negative restriction is operative only during the period of franchise, it is not hit by Section 27 of the Contract Act, so as to be termed as in restraint of trade.

  • Bharat Sanchar Nigam Ltd. Vs Motorola India Pvt. Ltd.[iv]

Purchaser also provides with the qualification of said damages

The Court here held that the purchase order that gives unilateral right to determine liquidated damages to the appellant purchaser and also provide that the quantification of said damages would be final and not to be challenged by the respondent- supplier in the restrain of legal proceedings of the Act of 1872.

  • Hakam Singh Vs M/S. Gammon (India) Ltd.[v]

Parties cannot confer jurisdiction on a court which does not consists

The Supreme Court here held that the agreement was not opposed to the public policy and it did not contravene Section 28 and therefore the suit was filed at Varanasi was also dismissed. The position would be different if the Bombay Court has no jurisdiction and such an agreement is void because the parties cannot confer jurisdiction on a court which does not consists.

  • Dilip Kumar Ray Vs Tata Finance Ltd.[vi]

The suit can be held only at the place agreed to between the parties

In this case it was held that plaintiff did not get the right to file a suit at Bhubaneshwar. The suit can, therefore be held only at the place agreed to between the parties, i.e. Bombay. In order that the agreement stipulating that a particular court alone has jurisdiction is enforceable it is further necessary that the agreement should have been properly entered into.

  • Shekharchand Jain Vs Ramnarayan[vii]

Person declared winner of prize money cannot sue for the recovery of the prize money

It was held that though a State lottery is not illegal, the same is nonetheless in the nature of wager and therefore void as the question was regarding the recovery of prize on a State Lottery. Hence a person declared winner of prize money on lottery cannot sue for the recovery of the prize money.


The Indian Contract Act prohibits the contracts which are immoral or against the public policy or are in the direct violation to the fundamental rights which is prescribed there in the Indian Constitution. It is important to restrict the contracts of the act which if implemented suffering would be there for the general people. Though the working of the act is to promote the relationships between the parties.


[i] Suraj Vs Suku ILR 51 All 164

[ii] Rao Rani Vs  Gulab Rani On 21 March, 1928 [ILR 1942 All 810]

[iii] M/S Gujarat Plotting Co. Ltd. Vs The Coca Cola Co. & Ors on 4 August, 1995 [1995 AIR 2372]

[iv] Bharat Sanchar Nigam Ltd. & Anr Vs Motorola India Pvt. Ltd on 15 September, 2008 [Civil Appeal No. 5645 of 2008]

[v] Hakam Singh Vs M/S. Gammon (India) Ltd on 8 January, 1971 [ 1971 AIR 740]

[vi] Dilip Kumar Ray Vs Tata Finance Ltd. On 27 August, 2001 [2001 II OLR 425]

[vii] Shekharchand Jain Vs Ramnarayan on 1977 [2 M.P.W.N. 118.]

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