VOID AGREEMENTS AND

CONTINGENT CONTRACTS

Joynab Binta Marium Kali

Lecturer
Department of law
Noakhali science and
Technology University
 Topics will be covered

• Types of Void Agreements

• Illustration of the Void Agreements based on
various sections of the Contract Act 1872.
• Wagering Contracts
 Definition of Void Agreement

• Section 2(g) of the Contract Act 1872:

“ An agreement not enforceable by law is said to
be be void.

• Section 2(h): An agreement enforceable by

law is contract.
 Definition of Valid Contracts

• Section 10 of the Contract Act 1872:

• “ All agreements are contracts if they are
made by the free consent of parties
competent to contract, for a lawful
consideration and with a lawful object, and
are not hereby expressly declared to be
void.
 Types of Void Agreements
• Agreements expressly declared to be void.
• i. Agreements by a Incompetent to Contract (Sec.11).
• ii. Mistake of Fact (Both Parties, Essential Fact)
(Sec.20).
• iii. Where Object or Consideration is Unlawful
(Sec.23).
• iv. Where Object or Consideration is Unlawful in Part
(Sec.24).
• v. Agreements made without consideration (Sec. 25).
 Types of Void Agreements
• vi. Agreements in Restraint of Marriage (Sec.26)
• vii. Agreements in Restraint of a Trade (Sec.27)
• viii. Agreements in Restraint of Legal Proceedings
(Sec.28)
• ix. Agreements, Meaning of which is Not Certain
(Sec.29)
• x. Agreements By Way Wager (Sec.30)
• xi. Agreements Contingent on Impossible Event
(Sec.36)
• xii. Agreements To Do an Impossible Act (Sec.56(1)).
Agreements in Restraint of Marriage
• Sec.26 “Every agreement in restraint of the
marriage of any person, other than minor, is
void.”
• but restrictive agreement containing a promise
not to marry anybody else.
• Lowe v. Peers, (1768) : Mr. Peers promised Mrs.
Catherine Lowe, that he would not marry anyone
other than Mrs. Lowe and promised further to
pay, Mrs. Lowe, 2000 pounds on default.
Agreements in Restraint of a Trade

• Sec.27 “Every agreement by which anyone is

restrained from exercising a lawful profession,
trade or business of any kind, is to that extent
void.”
• If goodwill is sold and Restraint is imposed on
using that goodwill then it is valid [Exception 1]
 Agreements in Restraint of a Trade
EXCEPTIONS
•Sale of Goodwill: a seller of goodwill
may be restrained from carrying on (i)a
similar business, (ii)within specified local
limits, (iii) so long as the buyer carries on a
like business: provided (iv) that such, limits
appear to the Court reasonable regard being
had to the nature of the business.
 Agreements in Restraint of Legal
Proceedings
•Section 28 of the Contract Act 1872:
•“Every agreement, by which any party
thereto is restricted absolutely from
enforcing his rights under or in respect of
any contract, by the usual legal proceedings
in the ordinary tribunals, or which limits the
time within which he may thus enforce his
rights is void to that extent.
 Agreements in Restraint of Legal
Proceedings

• This Sec. applies to only rights arising from

contract. Not to cases of crime or tort.
• Does not affect the law relating to arbitration.
• Does not affect an agreement “not to file an
appeal”
Conditions to be satisfied to make an
agreement void under s. 28:

Every agreement in restraint of legal proceedings is not

void, rather the following conditions are to be satisfied to
make an agreement void on this ground under section 28:
i. The restraint must be absolute.
ii. The restraint must be regarding rights under or in
respect of any contract.
iii. It has to restrain usual legal proceedings.
iv. limits the time for enforcement of the right.
 Exception to section 28

Exception 1.–This section shall not render illegal a contract

by which two or more persons agree that any dispute which
may arise between them in respect of any subject or class of
subjects shall be referred to arbitration, and that only the
amount awarded in such arbitration shall be recoverable in
respect of the dispute so referred.

Exception 2.-Nor shall this section render illegal any contract

in writing, by which two or more persons agree to refer to
arbitration any question between them which has already
arisen, or affect any provision of any law in force for the time
being as to references to arbitration.
 Meaning of the Agreement is
Uncertain

• According to Section 29: Agreements, the

meaning of which is not certain, or capable of
being made certain, are void.

• Illustration:
• a) A agrees to sell to B “a hundred tons of oil”.
There is noting whatever to show what kind of
oil was intended. The agreement is void for
uncertainty.
(b) A agrees to sell to B one hundred tons of oil of a specified description,
known as an article of commerce. There is no uncertainty here to make the
agreement void.
(c) A, who is a dealer in coconut-oil only, agrees to sell to B "one hundred
tons of oil". The nature of A's trade affords an indication of the meaning of the
words, and A has entered into a contract for the sale of one hundred tons of
Coconut-oil.
(d) A agrees to sell B "all the grain in my granary at 5[Rangpur]". There is no
uncertainty here to make the agreement void.
(e) A agrees to sell to B "one thousand mounds of rice at a price to be fixed
by C". As the price is capable of being made certain, there is no uncertainty
here to make the agreement void.
(f) A agrees to sell to B "my white horse for Taka five hundred or Taka one
thousand". There is nothing to show which of the two prices was to be given.
The agreement is void.
 Wagering Agreements

• Sec. 30 “Agreements by way of wager are void;

and no suit shall be brought for recovering
anything alleged to be won on any wager, or
entrusted to any person to abide the result of
any game or other uncertain event on which
may wager is made.”
 Wagering Agreements
•“A wagering agreement is one by which two
persons professing to hold opposite views
touching the issue of a future uncertain event
mutually agrees that, dependent upon the
determination of that event, one shall win from
the other, and the other shall pay or hand over to
him, a sum of money or other stake, neither of the
contracting parties have any other interest in that
contract.”
• Carlill V/s Carbolic Smoke Ball Co.
 Wagering Agreements

Essentials of a wagering agreement

1.Opposite views about an uncertain event
2.Chances of gain or loss to the parties
3.No other interest in the event except the amount of
bet.
4.Neither of the parties must have control over the
event
5.Must have no other interest other than the stake
6.Gambling Intent
 Wagering Agreements
Exceptions:
1. Any horse races.
2. Lottery. {In Shekharchand Jain v. Ramnarayan
(1977)} though a State Lottery is not illegal, the same is
nonetheless in the nature of wager, and, therefore, void.
Hence, a person declared winner of prize money on lottery
cannot sue for the recovery of the prize money.
3. Crossword competitions (skill/merits).
4. Games of skill, e.g., picture, puzzles or athletic
competitions:
5. A contract of insurance.
6. Share market transactions.
 Impossible Event/Act

• Agreements Contingent on Impossible Event

(Sec.36):
• Contingent Agreement to do or not to do
anything if an impossible event happens, are
void, whether the impossibility of the event is
known or not to the parties to the agreement at
the time when it is made.
• Illustrations
(b) A agrees to pay B 1,000 Taka if B will marry A's daughter
C. C was dead at the time of the agreement. The agreement
is void.
 Impossible Event/Act

• Agreements To Do an Impossible Act. Sec.56(1))

• Initial Impossibility or subsequent impossibility

Illustrations
(a) A agrees with B to discover treasure by
magic. The agreement is void.
Thank you……