Assignment

Department: Managment Science

Course Name: Business Law
Assignment Topic: Void Agreement
Instructor: Ma’am Naila
Submitted by: Muhammad Akbar Lodhi
Roll no. #3021
 Table of Content

Void Agreement------------------------------------------ 1
Introduction----------------------------------------------- 2
Types of Void Agreement------------------------------ 2
Agreements in Restraint of Marriage--------------- 3
Agreements in Restraint of a Trade ---------------- 4
Agreements in Restraint of Legal Proceedings--- 6
Agreements, Meaning of which is Not Certain--- 8
Agreements By Way of Wager ----------------------- 9
Agreements Contingent on Impossible Event---- 10
Agreements To Do an Impossible Act-------------- 11
Criticism--------------------------------------------------- 12
Conclusion------------------------------------------------ 13
Suggestion------------------------------------------------ 14
Void Agreement
Introduction
“An Agreement that is not enforceable by law is known as Void
Agreement”
All agreements are contracts if they are made by the free consent of
parties competent to contract, for a lawful consideration and with a
lawful object, and are not expressly declared to be void. The
agreements that are expressly declared as void are as follows.
 Agreements in Restraint of Marriage
 Agreements in Restraint of a Trade
 Agreements in Restraint of Legal Proceedings
 Agreements, Meaning of which is Not Certain
 Agreements By Way of Wager
 Agreements Contingent on Impossible Event
 Agreements To Do an Impossible Act
Agreements in Restraint of
Marriage
Every person has the right to marry a person of his/her choice.
Therefore an agreement that restrain a person from marriage is void, or
Every agreement in restraint of the marriage of any person, other than
minor, is void. The law does not allow any restriction on the freedom of
a person’s choice or freedom in selecting a marriage partner.

Example:
1. A agrees with B that she will not marry C, its a void agreement.
2. Mr. A promised Mrs. B, that he would not marry anyone other
than Mrs. B and promised further to pay, Mrs. B, Rs 2000/- on
default.
3. A wants to marry B and no one else but B. This is a choice and
there is no restraint in marriage. This is a valid contract of
marriage.
Agreements in Restraint of a
Trade
Every agreement by which anyone is restrained from exercising a
lawful profession, trade or business of any kind is void agreement.

Exceptions
Following are the exceptions to an agreement in restrain of trade.
1) Sale of Goodwill:
A seller of goodwill may be restrained from carrying on a similar
business, within specified local limits, such an agreement is known as a
valid agreement.
Example:
1. A sells his bakery to B will goodwill of Rs 1 lac and agrees not open
a bakery in that location. This agreement is void.
2. A purchased B’s guns manufacturing business. According to
agreement, A restricted B from carry on production of guns for 10
years. B breached the agreement and A sued him. It was held that
restriction was valid.
2) Partners Agreement:
Following are the agreements among partner in partnerships are
valid.
 Amongst the Partners
 Retiring Partner
 On dissolution of Partnership
 Sale of Good Will of Partnership.
 3) Trade Combination:
An agreement amongs various businessmen to regulate the prices and
output is a valid agreement. But trade combination which creates
monopoly and is aginst public interest is void.
Example:
1. An agreement between the members of OPEC to regulate the
prices is valid agreement.
4) Service Agreement:
An agreement of service may contain a condition that employee
will not work anywhere else during the period of employment.
Exmaple:
1. A doctor joins army on condition that he/she will not practice
privatly during the employment.
Agreements in Restraint of
Legal
Proceedings
An agreement by which any party is restricted from enforcing his
rights under a contract by legal proceedings or which limites the time
within which he enforce his rights is void.
An agreement which prevents a person to take legal actions arising
from contract is void. Similarly an agreement which reduce the period
of taking actions is also void.
Example:
1. A agrees to sell sugar to B and both agrees to sue each other in
case of breach of contract. The agreement is void.

Exceptions:
Following are the exceptions from above rules:
1. Does not affect the law relating to arbitration
2. Does not affect an agreement “not to file an
appeal in lower courts”
Uncertain
Agreements, the meaning of which is not certain, or capable of being
made certain, are void. An agreement must be free from ambiguity and it
must be clear, complete. It must specify quality, quantity, price, title etc.
An Agreement whose meanings are not clear, so that there is uncertainty
creating confusion between people is a void agreement. The parties to a
contract should be aware of the precise nature and scope of their mutual
rights and obligations under the contract. Thus, if the words used by the
parties are indefinite, the law cannot enforce the agreement.

Example:
1. A agrees to sell his horse to B for Rs 40000 or 50000. It is not clear
which price to sell that is why it is void agreement.
2. A agrees to sell to B “a hundred tons of oil”. There is nothing
whatever to show what kind of oil was intended. The agreement
is void for uncertainty.
Wagering Agreements
Wager means a bet. A wager is an agreement to pay money or
money’s worth on happening or not happening of an event. Each party
has the equal chance of win or lose.
Example:
1. Gambling
2. A agrees to pay Rs 500 to B if it rains. If it does not rains, B have to
pay Rs 500 to A.
3. A and B mutually agree that if it rains today A will pay B Rs 100
and if it does not rain B will pay A Rs 100
4. C and D enter into an agreement that on tossing up a coin, if it
falls head upwards C will pay D Rs 50 and if it falls tail upwards D
will pay C Rs 50, there is a wagering agreement.

Essentials of a wagering agreement

1. Opposite views about an uncertain event
2. Chances of gain or loss to the parties
3. No other interest in the event except the
amount of bet.
Agreements Contingent on
Impossible Event
An agreement whose performance depends on happening or non
happening of uncertain event is void agreement.
Example:
1. A agrees to pay Rs 1 Lac to B if he marries A’s daughter but A’s
daughter is already dead. This agreement Void.
2. An agreement that sun will rise from west next morning. It is a
void agreement.
3. Insurance contracts are valid contracts even though they provide
for payment of money by the insurer on the happening of a future
uncertain event. Such contracts differ from wagering agreements
mainly in three respects:
(a) The holder of an insurance policy must have an ‘insurable interest’
in the event upon which the insurance money becomes payable. Thus
contracts of insurance are entered into to protect an interest. In a
wagering agreement there is no interest to protect and the parties bet
exclusively because they can thereby make some easy money.
(b) Contracts of insurance are based on scientific and actuarial calcula-
tion of risks, whereas wagering agreements are a gamble without any
scientific calculation of risks.
(c) Contracts of insurance are regarded as beneficial to the public,
whereas wagering agreements do not serve any useful purpose.
Agreements To Do an
Impossible Act
An agreement to do an impossible act is a void agreement. An
agreement to do an impossible act is void. An agreement, which is
made to perform some impossible act, is void. If the promisor has the
knowledge that the agreement is impossible he must pay compensation
to the promisee for losses due to non fulfillment of the promise.
Example:
1. A agrees to B to descover gold by magic. This is void.
2. An agreement to take tourists to Canada and bring them back to
Pakistan in 10 hours is an impossible task. The agreement is void.

In case of Restitution
When a contract is void no party is required to perform it but if a party
has received a benefit, it must restore it or compensate the other party.
This rule is based on the principle of justice and equity that no person
should be allowed to get a benefit at the expense of another
Criticism
There are some misconceptions about Void agreement and Void
Contract. A void agreement is void since it is formed. But on the other
hand, a void contract is one that is valid at the time of creation but
eventually becomes void, due to certain circumstances, which are
beyond the control of parties concerned.
Void agreement is void due to the absence of essentials of valid
agreement., while void contract occures due to the impossiblity of
performance.
Void agreement is void from the very beginning while void contract is
valid in beginning and later becomes void.
Void agreements cannot be challenge in court of law because they are
not capable of being legally executed. There are still loopholes in law
and still it requires proper legistlation. Examples of void contracts
include contracts based on illegal subject matter, contracts for the
performance of impossible events, and contracts restraining a person's
choice of who to marry.
Conclusion
With the above discussion and example, we might be able to
understand the terms in detail. While a void agreement does not create
any legal obligation. On the other hand, the legal obligations created
during the formation of a valid contract comes to an end, when the
contract becomes void.
Suggestions
Despite the proper details about the void agreements, it still
requires proper lagistlation
Since a contract is a legally binding agreement, in the typical scenario,
once you enter into a contract with another person or business, you
and the other party are both expected to fulfill the terms of the
contract. But it's possible for valid contract to be found unenforceable
in the eyes of the law that is why it is important to fulfill all the
requirnment and essential of a valid contract in order to protect oneself
from any future disputes.
Multiple Choice Questions
1) An agreement contingent on impossible events are
a) Void
b) Voidable
c) Non of above

2) An agreement whose meaning is uncertain is

a) Valid
b) Void
c) Voidable

3) A voidable Contract is
a) Illegal agreement
b) Partly valid contract
c) None of the above

4) A wagering agreement is
a) Immoral
b) Forbidden by law
c) Opposed to public policy

5) An agreement with alien enemy is

a) Unlawful
b) Voidable
c) Valid
6) Regulations regarding opening and closing of business market is
a) Valid
b) Unlawful
c) Restrain in trade

7) An agreement in restrain of marriage of any person other then

minor is
a) Valid
b) Invalid
c) Void

8) A contract of insurance
a) Wagering agreement
b) Contingent agreement
c) Unilateral agreement

9) X agrees to pay Rs 50000 to B if his house gets burnt. It is

a) Wagering agreement
b) Contingent agreement
c) Void agreement