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VOID CONTRACT SEC 517 (2a) Clause 1,2,3 &4 517 (2b) 517 (2c) by Jeevan Regmi

This document provides further illustrations on the differences between void and voidable contracts, including examples. It outlines several provisions where contracts restraining trade would be considered void, such as a contract preventing someone from practicing their profession. However, in some cases restraint of trade can be valid, such as selling the goodwill of a business or partnership agreements between employees not to compete. The document lists five provisions where restraint of trade contracts would be valid and provides examples for each.

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Jeevan Regmi
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87 views2 pages

VOID CONTRACT SEC 517 (2a) Clause 1,2,3 &4 517 (2b) 517 (2c) by Jeevan Regmi

This document provides further illustrations on the differences between void and voidable contracts, including examples. It outlines several provisions where contracts restraining trade would be considered void, such as a contract preventing someone from practicing their profession. However, in some cases restraint of trade can be valid, such as selling the goodwill of a business or partnership agreements between employees not to compete. The document lists five provisions where restraint of trade contracts would be valid and provides examples for each.

Uploaded by

Jeevan Regmi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Further illustrations on the differences between void contract and voidable contract are given

below with provision and examples

A. VOID CONTRACT

VOID CONTRACT SEC 517(2a) clause 1,2,3 &4; 517(2b); 517(2c) By Jeevan Regmi
law provision:
Contracts restraining anyone from exercising any profession, trade or business is void.
Example: Ram a optician contracts with Shyam who runs a eye clinic just in front of ram`s clinic
giving Shyam Rs.1crore to shut down his clinic is a void contract.

However, in the following cases it won’t be void.


i. Provision: if there is sale of goodwill of trade or business; buyer can restrain seller
from carrying on similar trade or business under such goodwill for the time and at
the place specified
Example: Madan sells his M&J BHADA PASAL to Sudan for 50 lakhs. In the contract
between Madan and Sudan it is written Madan won’t be allowed to open any
BHADA PADSAL in that area for another 2 years is a valid contract.

ii. Provision: in a partnership firm, partners can have a contact restraining each other
a. from doing the same business as that of their partnership firm until the
partnership exits,
for example in ABC TUTORS is a partnership firm running a tuition center. In
the contract A, B, and C agreed not to open any tuition centers of their own
aside from this ABC TUTORS is a valid contract.
OR
b. doing the same business as that of their partnership firm for a certain reasonable
period or at a certain place after being separated from the partnership,
for example in the above ABC TUTORS the partners may agree in a contract
that even after being separated from the partnership they wont be allowed to
open any tuition centers of their own for 1 year from retirement in that locality

c. doing any other profession/ trade/business together with their firm`s competitor
for example in the above ABC TUTORS they may also agree in contract that
they won’t in any way do any profession with XYZ tutors. Here such restrain
of profession will be considered valid in the eyes of law.

iii. if a employer restrains its employee from accepting the service of its competitor
until the person is in the service of, or for a specified period after retirement from
the service of such employer
Example: COKE company contracting with its internal auditor Hari that restrains
Hari from accepting the auditing service of PEPSI company shall be considered a
valid contract.
iv. A contract in restraint of a marriage other than one prohibited by the law
For example : SITA contracts with RITA giving a sum of 30 lakhs restraining her to
marry Hari is void contract.
v. A contract restraining any one from enjoying the facilities being enjoyed by the
public.
Example: Ram contracts with Shyam giving him 10 lakhs, for not to use police
service for 10 months is a void contract.

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