Introduction:
According to section 2(g) of the Indian Contract Act, 1872 “an agreement not enforceable by law is said to be void.” From section 24 to 30 of the act mentions certain agreements which are void. Although, the agreement satisfy the essentials of a valid contract.
Types of Void Agreements:
This act divides the void agreement into ten categories:-
Agreement by a minor (section 11)-
An agreement by a minor is not a valid contract. According to section 11 of the Indian Contract Act, 1872 to enter into a contract person shall have attained the age of majority.
This concept has been cleared by Privy Council in Mohoribibi v. Dharmodas Ghose, that a contract made by a minor is a void contract.
Agreement by an insane person (section 12)-
Section 12 of the Indian Contract Act, 1872 says “a person is said to be of sound mind for the purpose of making a contract if at the time he makes it, he is capable of understanding it and of forming a rational judgement as to its effect upon his interest.” An insane person can enter into a contract when he is capable to understand the facts of the contract.
It was held in the case of Amina Bibi v. Saiyid Yusuf, that the agreement of a person of unsound mind is void.
In Nilima Ghosh v. Harjeet Kaur, the court ruled that if the person at the time of agreement is mentally capable, the contract is valid.
Agreements which has unlawful consideration and object (section 24)-
If either consideration or object of an agreement is unlawful, the agreement is void stated by section 24 of the Indian Contract Act, 1872.
In S.L. Fernandes v. V.M. Fernandes, the plaintiff has a license to run a business of liquor. He made a contract with the defendant to run the bar in exchange for the annuity of a fixed amount. The plaintiff has transferred the whole charge to the defendant but the former failed to pay the annuity. The plaintiff took an action to recover the money. It was held that the defendant has no license to sell the liquor i.e. the object is unlawful. Hence, the agreement is void; the plaintiff is not entitled to recover the money.
Agreement without consideration (section 25)-
If an agreement is made without consideration, the agreement is void. Except the parties are in close relation, it compensates a past service or pays a time-barred debt.
If a brother transfers his property to his brother it is due to natural love or affection and this agreement is binding without consideration. It was held in the case of Bhīma v. Shivaram.
In Rajlucky Dabee v. Bhootnath Mookerjee, the husband promised his wife to pay an amount monthly for maintenance and separate residence. This is not due to love or affection but because of a quarrel.
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Agreement in restraint of marriage (section 26)-
Agreement in restrain of any person other than a minor is void. This restrains a person’s right to marry, it is against public policy.
In Venkata Kristnayya v. Lakshmi Narayana, a contract made with the consideration to pay the father for giving his daughter is immoral and opposed the public policy. Therefore, it is void.
Agreement in restraint of trade (section 27)-
An agreement that restricts someone to carry on a lawful profession or trade is void. It violates the right to trade. Unless the goodwill is sold.
In Mdhub Chander v. Rajcoomar Dass, both parties carried a business at the same place. Defendant made a contract with the plaintiff that if close his business from this place he will pay him an amount. Plaintiff took an action against the defendant as he failed to pay. The contract is a void one so; the plaintiff is liable for any claim.
Agreement in restraint of legal proceeding (section 28)-
The parties to the contract cannot restrict the jurisdiction to a particular area. The same was discussed in the case of Hakam Singh v. Gammon India Ltd. A clause of the agreement provided that “court of the law in the city of Bombay alone shall have the jurisdiction to adjudicate thereon.” The plaintiff filed a case in the court of Varanasi. The Supreme Court ordered that the agreement contravenes section 28 of the Indian Contract Act therefore it is void.
Agreement which is uncertain (section 29)-
An agreement that has an uncertain object is void in accordance with section 29 of the Indian Contract Act, 1872.
In Kalyan Singh v. Ranjot Singh, there was an agreement between the parties for the sale of barberry roots. The payment was to be made through a cheque after the delivery. The cheque was dishonored due to inadequate funds. There was ambiguity in the time of payment. Therefore the agreement is void.
Agreement by way of wager (section 30)-
The meaning of a wagering contract has been decided in the case of Carlill v. Carbolic Smoke Ball by Justice Hawkins. He states, “A wagering agreement is an agreement by two parties that one of them will win from the other, and that other pay or hands over some stake. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering agreement.”
In Babasaheb v. Rajaram, two wrestlers made an agreement if either of them failed to appear they will pay a sum to the other party. One of them failed to appear and the other sued him for the sum. The defendant pleaded that it is a wagering agreement but the court ordered that, it is not a wagering agreement.
Agreement to do an impossible act (section 56)-
An agreement to do an act is void. It may be initially impossible or become impossible afterward.
In the case of Taylor v. Caldwell, the hall was destroyed by fire without the fault of the defendant in which the plaintiff was supposed to perform. The plaintiff sued the defendant. It was held that it was not a breach of contract as the contract become void without the fault of either party.
Conclusion:
A contract may become void if it is made by a minor or an insane person. For a valid contract, its object or consideration should be lawful and not violates the right of another person. It may also be void due to uncertainty of the object or if an act becomes impossible to perform. A consideration in an agreement is necessary for its validity.
References:
Books:
Indian Contract Act, 1872
Law of Contract Part I by R.K.Bangia; Edition 2006
Law of Contract and Specific Relief by Avtar Singh; Ninth Edition
Cases:
Mohoribibi v. Dharmodas Ghose, 1903 30 IA 114: 30 Cal. 539
Amina Bibi v. Saiyid Yusuf, ILR 1922 44 All 748
Nilima Ghosh v. Harjeet Kaur, AIR 2011 Del. 104
S.L. Fernandes v. V.M. Fernandes, AIR 1981 Goa 18
Bhīma v. Shivaram, 1899 1 Bom. L.R. 495
Rajlucky Dabee v. Bhootnath Mookerjee, 1900 4 CWN 488
Venkata Kristnayya v. Lakshmi Narayana, 32 Mad. 185. 1
Mdhub Chander v. Rajcoomar Dass, 1874 14 B.L.R. 76
Hakam Singh v. Gammon India Ltd., AIR 1971 SC 740
Kalyan Singh v. Ranjot Singh, AIR 2002 H.P. 180
Carlill v. Carbolic Smoke Ball, 1892 2 Q.B. 484
Babasaheb v. Rajaram, AIR 1931 Bom. 264
Taylor v. Caldwell, Queen’s Bench, 1863 3 B&S 826: 122 ER 309
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