VOID AGREEMENTS

VOID AGREEMENTS

Void agreements are agreements which are not enforced by the law courts. Section 2(g) of the Indian Contract Act states that a void agreement is, “an agreement not enforceable by law”. Therefore the parties to the contract do not get any legal redress in the case of void agreements.

Void agreements arise due to the non-fulfilment of one or more conditions laid down by Section 10 of the Indian Contract Act. This Section states as follows:

For Instance :

The agreement is without any consideration, certain agreements that are against public policy, an agreement made by an agreement etc.

An agreement, that was legal and enforceable when it was entered into, may subsequently become void due to the impossibility of performance, change of law or any other reason. When it became void the agreement ceases to have legal effect. All the agreements are contracts if they are made with the free consent of the parties competent to a contract, for a lawful, consideration and with a lawful object, and are not hereby expressly declared to be void.

The following agreements are expressly declared void by the Indian Contract Act: 

Section 11 states that an Agreement by a minor or a person of unsound mind is void. 

Section 23 states that an Agreement of which the consideration or object is unlawful is void.

Section  20 states that an Agreement made under a bilateral mistake of fact material to the agreement is void. 

Section 25 states that an Agreement made without any consideration is void. 

A Void contract is valid when it is entered into but after it is formed due to some limitation it becomes non-enforceable.

Section 23 states that an Agreement in restraint of marriage is void. 

Section 27 states that every individual enjoys the freedom to marry and so according to section 26 of the contract act “every agreement is restraint of the marriage of any person, other than a minor, is void.” Agreement in restraint of trade.

Section 28 states that an agreement whereby one of the parties agrees to close his business in consideration of the promise by the other party to pay a certain sum of money, is void, being an agreement in restraint of trade, Agreement in restraint of legal proceedings.

Section 29 states that an agreement of which the meaning is uncertain is void. 

X agrees to sell to Y “a hundred tons of oil.” There is nothing to show what kind of oil was intended. The agreement is void of uncertainty.

Section 30 states that an agreement by way of a wager is void.

The word ‘wager’ literally means ‘a bet’ something stated to be lost or won on the result of a doubtful issue, and, therefore, wagering agreements are nothing but ordinary betting agreements Agreement contingent on impossible events. 

Section 36 states that “Contingent agreements to do or not to do anything if an impossible event happens are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.

In Madura Municipality v. Raman Servai states that the leases, not having been taken in accordance with Section 69, District Municipalities Act, are not enforceable at law. They would therefore be merely agreements which are void ab initio. And having regard to the ruling of the Judicial Committee in Harnath Kuar v. Indar Bahadur Singh 1922 45 All 179 it cannot now be disputed that the words “discovered to be void” in Section 65, Contract Act include also cases where agreements are void ab initio. It has therefore, to be held that agreements of this kind come within the ambit of Section 65 and, as there is no provision in the District Municipalities Act that the general provisions of Section 65 Contract Act are not applicable to contracts made by the Municipal Council, it is not reasonable to hold that the provisions of section 65 are inapplicable to such agreements. If Section 65 applies, the defendants are liable to restore to the Municipality any advantage which they had under the void agreements. It follows that the defendants are liable to pay damages for the use and occupation of the lands.

In A.I CONSTRUCTION PVT. LTD V. GOODWILL (1)LTDPETITIONER. it was stated that it is pertinent to state here that Sections 24 to 30 of the Indian Contract Act specifically deal with void agreements. Subjects covered by either of the aforementioned clauses 25 and 33 of the agreement do not fall in the category of any of the void agréements as enumerated in Sections 24 to 30 of the Contract Act.

Section 56 states that agreed to do impossible acts are void. 

An agreement to do an act impossible in itself is void.” 

(a) X agrees with Y to discover treasure by magic. The agreement is void.

(b) X agrees with Y to run with a speed of 100 Kilometre per hour. The agreement is void

Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witness, or any law relating to the registration of documents. From the above, it is quite clear that non-fulfilment of any of these conditions by one of the parties to a contract shall make an agreement void.

Free consent of the parties

1. Competency of the parties to contract;

2. Existence of a lawful consideration;

3. Existence of a lawful object;

Agreements under the Mistake of Law

Indian Contract Act has nowhere defined mistake. However, it can be defined as an erroneous belief about something. The mistake is of two broad types. 

(1) Mistake as to fact, and 

(2) Mistake as to Law.

Sec. 21 of the Act states that with the effect of Mistake as to Law, but is silent over other issues relating to such types of mistake.

In Kuju Collieries Ltd. v. Jharkhand Mines Ltd. And Others it was stated that it refers to a case where an agreement which was originally enforceable and was, therefore, a contract, becomes void due to subsequent happenings. In both these cases any person who has received any…and circumstances of this case. Section 65 reads as follows: “When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage…contract and an agreement which is not enforceable by law is said to be void.

In PANCHAXARAYYA S/O NEELKANTAYYA GANACHARI v. SMT.BHARATI W/O MALLIKARJUN PASALKAR  it was stated that Section 2(g) the Indian Contract Act, 1872 says that an agreement not enforceable by law is said to be void, and also Section 10 of the Indian Contract Act, 1872 with regard to what agreements are contracts and also says with regard to free consent, which is defined under Section 14 of the Indian Contract Act, 1872.

In Sukhpal Singh v. State Of Rajasthan & Others, It was stated that the issue involved in this case has been considered time and again before the Courts and basically, the issue is to be decided after considering: whether the documents, the sanctity of which is under challenge, provides for a void or voidable transaction? The transaction may be void if not enforceable at law as being destitute to legal effect. It has no legal existence and, thus, ceases to be enforceable by law, as defined under Section 2(g) of the Indian Contract Act, 1872 and such, transactions are dealt with under the provisions of Sections 20, 23, 26, 27. 28 and 29 of the Contract Act.

In V. Joseph v. Valsamma Varghese It was stated that Clause (9) in the agreement conferring jurisdiction to the trial court, to execute or enforce the terms of the compromise decree, after passing of the decree, is an agreement not enforcible by law and is said to be void as per Section 2 (g) of the Indian Contract Act 1872. It is needless to say, as per law, a decree can be executed by instituting an Execution petition, before the Execution Court, having jurisdiction and power to execute or enforce the decree only. In short, the parties cannot confer jurisdiction and power to the court by agreement in violation of the law governing jurisdiction and powers of the court and even if they enter into such an agreement, in violation of law, such an agreement is void and not enforceable. This section stipulates that any contract which has been entered to undertake any impossible activity shall be considered a void contract. The act further states that if when the contract was entered objective of the agreement wasn’t impossible but in the due course of time the objective became impossible then also the fulfilment of the contract isn’t necessary. The last part of the contract states that, if the promisor knows that objective of the contract has become impossible but still he enters into a contract with the promisee then, in that case, the promisor shall be liable to pay certain compensation which the promisee sustains because of non-performance of the contract. This section, in essence, talks about the “Frustration” of a contract. It stipulates that the performance of the contracts becomes impossible because of the disappearances of the subject matter.