Agreement Declared Void & Legal Formalities - Agreement, Business Law | Business Law - B Com PDF Download

Agreements Expressly Declared Void

Certain agreements have been expressly declared void by Indian contract Act, 1872. According to section 2(g) of Indian contract Act, 1872, “a void agreement is an agreement which is not enforceable by law”. Such an agreement does not give rise to any legal consequence and is void ab initio.

The following types of agreements have been expressly declared void under various sections of Indian contract Act, 1872:

1) Agreement the meaning of which is uncertain (section 29)

2) Agreements contingent on impossible events (section36)

3) Agreements to do impossible acts (section 56)

4) In case of reciprocal promises to do things legal and also other things illegal, the second set of reciprocal promises is a void agreement.

5) Agreements by or with person incompetent to contract (section 10 & 11)

6) Agreements made without consideration (section 25)

7) Agreements entered into through a mutual mistake of fact (section 20)

8) Agreements the consideration or object of which is unlawful (section 23)

9) Agreements the consideration or object of which is unlawful in part (section 24)

10) Agreements in restraint of marriage (section 26)

11) Agreements in restraint of trade (section 27)

12) Agreements in restraint of legal proceedings (section 28)

13) Agreements by way of wager (section 30)

Where the legal part of a contract can be separated from the illegal part, the illegal part may be rejected and the good one can be retained. But where the illegal part cannot be separated, the whole contract is void.

Agreement the meaning of which is uncertain (section 29) Agreements the meaning of which is uncertain or incapable of being made certain, the agreement is valid

Formalities of an Agreement

Agreements under the Indian Contract Act may be oral or in writing. Whenever an agreement is a valid contract and is made in writing it should be complete with all legal formalities. If the legal formalities are not complete, law cannot enforce it. The contract will become void. Some contracts have to be made in writing otherwise they will not be valid. In the following cases contracts have to be in writing:

• Cheques, bills of exchange, promissory notes and other negotiable instruments.
• Insurance contracts providing name of the insurer and the person insured and the period of insurance with all clauses have to be in writing.
• An agreement with a promise to pay a time barred debt.
• All lease agreements that are for a period exceeding 3 years. 
• Important documents of a corporate organization especially the Memorandum of Association and Articles of Association. 
• All valid contracts that relate to the transfer of immovable properties must be in written form.
• Arbitration agreements must be in writing to be enforceable by law. 

Certain documents have to be in writing and also registered in order to be enforceable the following documents must specially be taken care of under section 17 of The Registration Act of 1908. 

• The Transfer of Property Act, 1882, specifically states that all immovable properties must be registered. 
• The companies Act of 1956 states that Memorandum of Association, Articles of Association, Mortgages, Debentures and other documents that are compulsory under The Registration Act should be registered. 
• When a promise is made with natural love and affection and without consideration the agreement should be registered. 
• The Indian Trusts Act 1882, requires that the trust made should be in the form of a written agreement and be duly registered.