Agreements in Restraint of Legal Proceedings
Section 28 of the Indian Contract Act, 1872 establishes that any agreement that restrains one or both of the parties to the contract from proceeding to the courts is not valid or void. When there is a contract that prohibits a party to the contract from going to the courts or tribunals, or imposes any limit in time to approach a court is void and such agreements belong to restraint of legal proceedings. However, the act also provides for exceptions like, in case the agreement states that in case of any dispute between parties, such dispute will be referred to the arbitration, and if any amount is awarded in such arbitration, that shall be considered as final and it will be a valid contract.
Furthermore, if the parties to the contract agree that in case of any dispute between the two, either in the present or in the future will be referred to the arbitration, then such an agreement will be valid. But such a contract is required to be made in writing.
For example, where the bylaws of a stock exchange containing restrictions on members from initiating arbitration and requiring them to initiate within a specific timeline were held to be void. (A, Chandrasekaran v. Yoha Securities Limited).
Void Agreements : Meaning and Expressly Declared Void Agreements
Indian Contract Act, 1872 is a central law, and it validates the contracts or agreements between various parties. The act regulates and oversees all the business in case of any deal or an agreement. The Indian Contract Act, 1872 defines the term “Contract” under Section 2(h) as “An agreement enforceable by law”. Hence, a contract is anything that is an agreement and enforceable by the law of the land.
The Indian Contract Act, 1872 specifies certain essential elements which are required to be present in a contract, to form a valid contract. So, if those elements are not present, the contracts will not be legally binding on either of the parties and shall be declared either void or voidable. The parties to the contract should make sure that all the essential elements of a valid contract are present while engaging with any other party. In case a contract is void or voidable, restricted or no remedy will be available for the parties to the contract. Indian Contract Act has established certain agreements which are expressly declared as Void Agreements. These agreements are declared void by the law itself.
Geeky Takeaways:
- Indian Contract Act, 1872 is a central law, and it validates all the contracts or agreements between various parties.
- The Indian Contract Act, 1872 establishes several essential elements which are to be present in a contract. If such essential elements are absent, then such a contract or agreement is void.
- A void agreement is an agreement that is not enforceable by law.
- A void agreement confers no rights on parties to the contract or creates any obligation.
- The reasons why an agreement is declared void can be due to illegality, immorality, public policy, etc.
Table of Content
- What are Void Agreements?
- Expressly Declared Void Agreements
- 1. Agreement in Restraint of Marriage
- 2. Agreement in Restraint of Trade
- 3. Agreements in Restraint of Legal Proceedings
- 4. Agreement whose Meaning is Uncertain
- 5. Agreement by Meaning of Wager
- 6. Agreements Contingent on an Impossible Event
- 7. Agreement to do Impossible Acts
- Conclusion
- Frequently Asked Questions (FAQs)