Indian contract law | Legal guide
Void Agreements Under the Indian Contract Act, 1872: Sections 24 to 30
A practical explanation of when an agreement is void under the Indian Contract Act, 1872, including unlawful objects, lack of consideration, restraints on marriage and trade, restrictions on legal proceedings, uncertainty and wagering.
Under the Indian Contract Act, 1872, an agreement is not necessarily enforceable merely because the parties have signed it. Section 2(g) defines a void agreement as an agreement not enforceable by law. Section 2(j) separately addresses a contract that becomes void when it ceases to be enforceable. Section 10 states the general requirements for enforceable contracts, while Section 23 explains when an agreement's consideration or object is unlawful.
Section 24: Agreements void where consideration or object is unlawful in part
Section 24 addresses a single consideration supporting one or more objects, or several considerations supporting a single object, where an unlawful element is inseparable in the manner specified by the section. The agreement is void. The question is whether the lawful and unlawful elements are separable; Section 24 should be read with Section 23, which defines when consideration or object is unlawful.
Illustration: An agreement for a single payment in return for both a lawful service and an unlawful act may be void when the unlawful part forms part of the indivisible bargain.
Section 25: Agreements without consideration
The general rule is that an agreement made without consideration is void. Section 25 recognises important exceptions: (1) a written and registered agreement based on natural love and affection between parties in a near relation; (2) a promise to compensate someone for an act voluntarily done for the promisor or an act the promisor was legally compellable to do; and (3) a written and signed promise to pay, wholly or partly, a debt otherwise barred by limitation. The section also preserves the validity of completed gifts and addresses inadequacy of consideration in its explanation.
Illustration: A signed written promise to pay a time-barred debt can be enforceable if it satisfies Section 25(3), even without fresh consideration.
Section 26: Agreements in restraint of marriage
Every agreement restraining the marriage of any person other than a minor is void. The provision is directed at contractual restraints on the freedom of adults to marry.
Illustration: An agreement imposing a contractual prohibition on an adult marrying may be void under Section 26.
Section 27: Agreements in restraint of trade
An agreement restraining anyone from exercising a lawful profession, trade or business is void to that extent, subject to the statutory exception concerning sale of goodwill within reasonable local limits. Courts distinguish restraints operating during a subsisting contract from post-termination restraints; enforceability depends on the precise terms and applicable case law.
Illustration: A broad non-compete clause preventing a former employee from working in the same industry after employment may be unenforceable; confidentiality obligations require separate analysis.
Section 28: Agreements in restraint of legal proceedings
Section 28 generally invalidates terms that absolutely restrict a party from enforcing contractual rights through ordinary legal proceedings, shorten the period for enforcing those rights, or extinguish rights or discharge liability after a specified period so as to restrict enforcement. Statutory exceptions protect qualifying arbitration agreements, and a specific exception addresses certain bank or financial-institution guarantee terms.
Illustration: A clause requiring a party to bring a contractual claim within an unlawfully shortened period may be void, even if it appears in a signed contract.
Section 29: Agreements void for uncertainty
Agreements whose meaning is not certain, or capable of being made certain, are void. A court may uphold a bargain where objective evidence or an agreed mechanism makes its terms ascertainable.
Illustration: An agreement to sell an unspecified quantity of goods at an unspecified price, with no way to determine either, may fail for uncertainty.
Section 30: Agreements by way of wager
Agreements by way of wager are void, and a suit generally cannot be maintained to recover winnings or money deposited to abide the result of a wager. The section includes a narrow historical exception relating to certain horse-racing prizes; other central and state laws may also apply to gambling activities. A wagering agreement being void does not by itself mean every wager is a criminal offence.
Illustration: A private wager on the outcome of an uncertain event ordinarily cannot be enforced in a civil suit under Section 30.
How to assess whether an agreement is void
Identify the actual promise, consideration and object; check whether any statutory prohibition applies; review whether the unlawful term is severable; and consider any express statutory exception. The consequences of invalidity, restitution and recovery of benefits can require separate examination under other provisions, including Section 65 where applicable.
In particular, restraints of trade and clauses limiting legal remedies often require careful examination of the contract wording and current judicial decisions. The statutory provisions should not be applied as automatic labels to every confidentiality, arbitration, settlement or guarantee clause.
Official legislation and legal references
- India Code: Indian Contract Act, 1872 - statutory text and legislative information.
- India Code - official repository for central legislation and amendments.
- Supreme Court of India - judgments and court information relevant to interpretation.
This article is general legal information, not advice on a specific agreement. Read the current statutory text, relevant amendments and binding judgments before acting.