VOID AGREEMENTS

MEANING
According to section 2(g) of the Indian Contract
Act, 1872, a void agreement is an agreement
which is not enforceable by law.
The agreements which are not enforceable by
law right from the time when they are made.
Thus they are called void-ab-initio.
 AGREEMENTS THAT HAVE BEEN EXPRESSLY
DECLARED AS VOID -
1. Agreements by or with persons incompetent to
contract (sections 10 & 11)
2. Agreement entered into through a mutual mistake
of fact between the parties (section 20)
3. Agreement, the object or consideration of which is
unlawful (section 23)
4. Agreement, the consideration or object which is
partly unlawful (section 24)
5. Agreements made without consideration
(section25)
Cont..
6. Agreements in restraint of marriage(section 26)
7. Agreements in restraint of trade(section 27)
8. Agreements in restraint of legal
proceedings(section 29)
9. Wagering agreement (section 30)
10. Impossible agreement (section 56)
11. An agreement to enter into an agreement in
future
 Agreements in restraint of marriage

According to section 26 of the Indian Contract Act,

every agreement in restraint of the marriage of any
person other than a minor is void.
An agreement which provides for a penalty upon
remarriage may not be considered as a restraint of
marriage
Cases- Rao Rani Vs Gulab Rani
Badu Vs Badarannessa
 Agreements in restraint of trade
According to section 27 of the Indian contract
Act,1872, “every agreement by which anyone is
restrained from exercising a lawful profession,
trade or business of any kind, is to that extent
void.”
case – Shaikh Kalu Vs Ram Saran Bhagat
 Exceptions to the rule-
1. Exceptions under statutory provisions-
(a) Sale of goodwill
(b) Partners agreements
(i) restriction on existing partner
(ii) restriction on outgoing partner
(iii)restriction on partners upon or in
anticipation of the dissolution of the firm
(iv) restriction in case of sale of goodwill
2. Exceptions under judicial interpretations
(c) Trade combinations
(d) Sole dealing agreements
(e) Service agreements
Agreements in restraint of legal proceedings

According to section 28, the following two agreements

amount to restraint of legal proceedings and are thus, void
to that extent.
(a) Agreements restricting enforcement of Rights- an
agreement by which any party is restricted absolutely
from enforcing its legal rights under or in respect of any
contract.
(b) Agreements limiting the period of limitation- an
agreement which limits the time within which an action
may be brought so as to make it shorter than that
prescribed by the law of limitation
 Wagering agreements
According to section 30, an agreement between
two persons under which money or money’s worth
is payable, by one person to another on the
happening or non happening of a future uncertain
event is called a wagering event.
Example- a lottery
• Agreements by way of wager are void in India.
• Agreements by way of wager have been declared
illegal in the states of Maharashtra and Gujarat.
 Agreements to do impossible acts
According to section 56 of the Indian Contract
Act, 1872, “ an agreement to do an impossible
act is void.”
 PERFORMANCE OF A CONTRACT
A Contract is said to ha e been performed when the parties to
a contract either perform or offer to perform their respective
promises.
According to section 37, “ the parties to a contract must
either perform or offer to perform their respective promises,
unless such performance is dispensed with or excused under
the provisions of this Act or of any other law.
Types of performance-
• Actual performance
• Attempted performance(or tender)[section 38]
a) Tender of goods or services
b) Tender of money
 Essentials of a valid tender
1. unconditional- tender is said to be unconditional when it is made in
accordance with the terms of the contract.
2. At proper time- at stipulated time or during the business hours.
Tender before the due date is also not a valid tender.
3. At proper place- at stipulated place or at promisee’s business place
4. Reasonable opportunity to promisee- must give a reasonable
opportunity to the promisee of ascertaining that the goods offered
are the same as the promisor is bound to deliver
5. For whole obligation- it must be for the whole obligation and not
for a part of the whole obligation.
6. To proper person- it must be made to the promisee or his duly
authorised agent
7. Of exact amount and in legal tender- incase of tender of money, it
must be of exact amount and in legal tender
Persons who can demand Persons who can perform
performance
(a) Promisee (a) Promisorjoint promisors
(b) legal representative (b) Promisor’s agent
(c) Third party (c) Legal representatives
(d) Joint promisees (d) Third party
 BREACH OF CONTRACT
A breach of contract occurs if any party refuses
or fails to perform his part of the contract or by
his act makes it impossible to perform his
obligation under the contract.
A breach of contract may arise in two ways-
(a) Anticipatory breach[section39]
(b) Actual breach of contract
 Anticipatory breach of contract
Anticipatory breach occurs when the party declares
its intention of not performing the contract before the
performance is due.
Options available to Aggrieved Party
(a) He can rescind the contract and claim damages for
breach of contract without waiting until the due
date for performance.
(b) He may treat the contract as operative and wait till
the due date of performance and claim damages if
the promise still remain unperformed.
 Actual breach of contract
Actual breach of contract may take place in any
of the following two ways:
(i) On due date of performance
(ii) During the course of performance
Remedies for breach of contract
1. Rescission of contract- rescission means a right not to perform
obligation.
2. Suit for damages
(i) ordinary damages
(ii) special damages
(iii) exemplary or punitive or vindictive
damages
(iv) nominal damages
(v) damages for inconvenience and
discomfort
(vi) liquidated damages and penalty
3. Suit for specific performance- demanding the court’s direction to
the defaulting party to carry out the promise according to the terms of
the contract.
 Cont..
4. Suit for injunction- demanding court’s stay order.
Where a party to a contract does something which
he promised not to do, the court may prohibit him
from doing so.
5. Suit for quantum meruit- quantum meruit
means as much as is earned.
Right to quantum meruit means a right to claim the
compensation for the work already done
 QUASI - CONTRACTS
A Quasi contract is not a contract at all because
one or the other essentials for the formation of
a contract are absent.
It is an obligation imposed by law upon a person
for the benefit of another even in the absence of
a contract
It is based on the principle of equity, which
means no person shall be allowed to unjustly
enrich himself at the expense of another.
 Feature of a Quasi- contract
• It is imposed by law and does not arise from any
agreement.
• The duty of a party and not the promise of any party is the
basis of such contract.
• The right under it is always a right to money, and generally,
though not always, to a liquidated sum of money.
• The right under it is available against specific person(s) and
not against the world
• A suit for its breach may be filed in the same way as in case
of a complete contract.
Kinds of Quasi - Contracts
(a) Right to recover the price of necessaries
supplied[section 68] – a person who has supplied the
necessaries to a person who is incapable of contracting
or anyone whom such incapable person is legally bound
to support, is entitled to claim their price from the
property of such incapable person.
(b) Right to recover money paid for another person[ section
69] – a person who is interested in the payment of
money which another is bound by law to pay, and who
therefore pays it, is entitled to be reimbursed by other.
(c) Right to recover for Non-Gratuitous Act[section 70] –
such right to recover arises if following three conditions are
satisfied:
1. The thing must have been done or delivered
successfully.
2. The person who has done or delivered the thing, must
not have intended to do so gratuitously
3. The person for whom the act is done must have enjoyed
the benefit of the act.
(d) Responsibility of Finder of Goods[section 71] a person
who finds goods belonging to another, and takes them into
his custody, is subject to the same responsibility as a bailee
 Cont..
(e) Right to recover from a person to whom
money is paid or thing is delivered, by mistake
or under coercion[section 72] - a person to
whom money has been paid, or anything
delivered by mistake or under coercion, must
repay or return it.