Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer?

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Directions: Read the passage and answer the question that follows.

Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.

S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.

There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.

As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.

Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.

As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.

Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.

a)
Agreement is valid.
b)
Agreement is void.
c)
Agreement is invalid.
d)
None of the above

Correct answer is option 'A'. Can you explain this answer?

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Directions: Read the passage and answer the question that follows.Par...

This is a valid agreement since the place of carrying on business (a restraint) is specified. An agreement, in restraint of trade, should have reasonable terms. Restriction of one mile would be termed as reasonable. Hence, it is valid.

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Directions: Read the passage and answer the question that follows.Par...

Explanation of the Agreement's Validity
The agreement between Aman and Bishal is valid due to the following reasons:
1. Nature of the Agreement
- The agreement does not impose an unreasonable restriction on Aman’s ability to trade.
- It allows Aman to continue selling rice, but limits the area to one mile from his godown, which is a reasonable restriction.
2. Exception to Restraint of Trade
- Under Section 27 of the Indian Contract Act, an agreement that restrains a person from exercising a lawful profession, trade, or business is generally void.
- However, there are exceptions, particularly in cases of goodwill sales, where a seller can agree not to compete in a specified area.
- In this case, the agreement is more akin to protecting business interests rather than a complete restraint.
3. Reasonableness of the Restriction
- The specified radius of one mile is a limited geographic area, which is considered reasonable and does not infringe on Aman's fundamental right to earn a living significantly.
- Courts often uphold agreements that impose reasonable restrictions, particularly when they serve legitimate business interests.
4. Trade Context
- The agreement seeks to protect Bishal's business interests, ensuring that Aman does not directly compete in close proximity to his operations.
- Such agreements are recognized in commercial dealings to maintain fair competition and protect business viability.
Conclusion
- Given these points, the agreement between Aman and Bishal is valid and enforceable, as it does not violate the principles laid out in Section 27 of the Contract Act.

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Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is an exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Joe and Zee are in partnership, owning four factories of thermal paste used in CPU building. The factory owners, constituting a partnership, agreed that the factories will be working alternately, one at a time and the profits would be distributed among them. Decide.

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Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as restraint of trade is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.[Extracted, with edits and revisions, from restraint-trade-exceptions-2, blog by taxguru)Q.Under what circumstances can a party sell their goodwill and agree not to carry on a similar business within specified local limits, according to the passage?

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Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as restraint of trade is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.[Extracted, with edits and revisions, from restraint-trade-exceptions-2, blog by taxguru)Q.In XYZ city, Mohan and Rohan operated a tempo transportation service. In order for Rohan to refrain from carrying on tempo for a period of six months, Mohan agreed to pay Rohan a specific sum of money in exchange for their business agreement. Decide.

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Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as restraint of trade is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.[Extracted, with edits and revisions, from restraint-trade-exceptions-2, blog by taxguru)Q.According to S. 27 of the Contract Act, why are agreements in restraint of trade considered void?

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Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? for CLAT 2025 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CLAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer?.

Solutions for Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free.

Here you can find the meaning of Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer?, a detailed solution for Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? has been provided alongside types of Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Directions: Read the passage and answer the question that follows.Part XIII of Constitution contains provisions relating to the freedom of trade, commerce and intercourse within the territory of India. Just as the Legislature cannot take away individual freedom of trade, the individual cannot barter it away by an agreement.S. 27 of Contract Act says Agreement in restraint of trade is void, i.e. every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. The main reason behind this section is that agreements of restraint are unfair and unjustified as they impose an undue restriction on the personal freedom of a contracting party.There is exception, if a party sells his goodwill to another, he can agree with the buyer that he will not carry on a similar business within the specified local limits.As per S. 11 Partnership Act, partners during the continuance of the firm to restrict none of them shall carry on any other business than that of the firm and S. 36 of this Act, is related to restrain an outgoing partner from carrying on a similar business within the specified period and specified local limits. The agreement should specify the local limits or the period of restraint, and restrictions imposed must be reasonable.Agreement of service containing negative covenants is for preventing the employee from working anywhere during period covered by the agreement. Now, trade secrets are main contention for negative covenants. Employer wants to protect his trade secrets because of that employment agreement with negative covenants are generally used. Agreements for protection of confidentiality and trade secrets are not one sided or unfair or unreasonable. Any breach of such clauses on the part of employee can be treated as misconduct.As per Indian laws, any agreement which is related to restraint of trade and profession shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, it has shown that it has kept such non-compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non-compete clauses in employment contracts as 'restraint of trade' is impermissible under S. 27 of Contract Act, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.Q. Aman, a wholesale dealer in rice, enters into an agreement with Bishal that he would not sell rice beyond a radius of one mile of his godown.a)Agreement is valid.b)Agreement is void.c)Agreement is invalid.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice CLAT tests.