A. Introduction

In contract law, an agreement in restraint of legal proceedings is generally considered void. However, there are certain exceptions to this rule. In this scenario, we need to determine which exception is not covered by the void rule.

B. Restraint of Legal Proceedings

Restraint of legal proceedings refers to any agreement that restricts or prevents parties from initiating legal action to enforce their rights. Such agreements are generally considered against public policy, as they hinder access to justice and the resolution of legal disputes.

C. Exceptions to Void Rule

1. Cuts short the period of limitation: This exception refers to an agreement that reduces the time within which a party can bring a legal action. For example, if the usual limitation period for a particular claim is three years, the parties may agree to reduce it to two years. This exception is valid and enforceable as it does not completely restrain legal proceedings but merely shortens the time frame for initiating them.

2. Restricts absolutely the parties from enforcing their legal rights: This exception refers to an agreement that completely prohibits the parties from pursuing any legal action to enforce their rights. For instance, if two parties agree not to sue each other under any circumstances, it would fall under this exception. Such agreements are generally void as they undermine the principle of access to justice.

3. Discharges a party from liability or extinguishes the rights of a party: This exception relates to an agreement that releases a party from any legal liability or extinguishes their rights. For example, if a debtor agrees with a creditor to discharge their debt in exchange for giving up their rights to sue for any related claims, it would fall under this exception. Such agreements are generally void as they compromise the rights of the parties involved.

4. Provides for a reference to arbitration instead of court of law: This exception refers to an agreement that stipulates arbitration as the method for resolving disputes instead of going to court. Arbitration is an alternative dispute resolution mechanism where parties submit their disputes to an independent arbitrator(s) for a binding decision. Unlike the previous exceptions, agreements for arbitration instead of legal proceedings are generally valid and enforceable. Arbitration is a recognized and accepted means of resolving disputes, and parties willingly submit to the jurisdiction of the arbitrator(s) by entering into such agreements.

D. Conclusion

In conclusion, the exception that is not covered by the void rule relating to agreements in restraint of legal proceedings is the one that provides for a reference to arbitration instead of going to court. Arbitration agreements are generally valid and enforceable as they offer an alternative means of resolving disputes outside of traditional court proceedings.