Void and Voidable Agreements Questions and Answers

Q: Ramesh's job contract with M/s XYZ bars him from joining any rival software firm in India for three years post-resignation. But after resigning within three years, he joins a competitor. XYZ company filed a suit to enforce the restrictive clause.Under the Indian Contract Act, 1872, what is the legal position ?

The clause is void, because it restrains a lawful profession after employment ends.Section 27 of the Indian Contract Act, 1872 makes every agreement by which anyone is restrained from exercising a lawful profession, trade or business void, with only one statutory exception, the sale of goodwill. The Supreme Court in Superintendence Company of India v. Krishan Murgai held that a covenant restraining an employee from competing after the employment ends is void, however reasonable its period or area.Indian law does not apply the English test of reasonableness, so 'three years is reasonable' fails. Voluntary agreement does not save a void clause, and protecting the employer's interest justifies restraints only during the employment, not after it.

Q: During an India - Country X war, India declares X an enemy. A (an Indian citizen) enters into a contract to supply medicines to B (a citizen of X) via a neutral intermediary and a bank.Which of the following is most accurate under the Indian Contract Act, 1872 ?

The contract is void, because trading with an enemy in war is prohibited and is against public policy.Once war breaks out and a country is declared an enemy, contracts with its subjects that involve trade or intercourse with the enemy are unlawful. Under Section 23 of the Indian Contract Act, 1872 an agreement whose object is opposed to public policy is void, and trading with the enemy is a recognised head of such public policy, because it may aid the enemy's war effort.Routing payment through a neutral bank and supplying humanitarian goods do not change the character of the bargain; any lawful exception would have to come from a government licence, not from the parties. The contract is void from the outset, not merely voidable or valid until cancelled.

Ramesh's job contract with M/s XYZ bars him from joining any rival software firm in India for three years post-resignation. But after resigning within three years, he joins a competitor. XYZ company filed a suit to enforce the restrictive clause.

Under the Indian Contract Act, 1872, what is the legal position ?

A.Valid - three years is a reasonable period.
B.Void - restrains lawful profession after employment ends.
C.Valid - Ramesh agreed voluntarily.
D.Valid - protects the employer's business interest.

Exam Year(s)

AIBE - 2026,

Answer: B

The clause is void, because it restrains a lawful profession after employment ends.

Section 27 of the Indian Contract Act, 1872 makes every agreement by which anyone is restrained from exercising a lawful profession, trade or business void, with only one statutory exception, the sale of goodwill. The Supreme Court in Superintendence Company of India v. Krishan Murgai held that a covenant restraining an employee from competing after the employment ends is void, however reasonable its period or area.

Indian law does not apply the English test of reasonableness, so 'three years is reasonable' fails. Voluntary agreement does not save a void clause, and protecting the employer's interest justifies restraints only during the employment, not after it.

Discuss in Forum

During an India - Country X war, India declares X an enemy. A (an Indian citizen) enters into a contract to supply medicines to B (a citizen of X) via a neutral intermediary and a bank.

Which of the following is most accurate under the Indian Contract Act, 1872 ?

A.Void - trading with an enemy in war is prohibited and is against public policy.
B.Valid - goods are humanitarian and payment is via a neutral country.
C.Voidable - only the Government of India can cancel.
D.Valid unless the Government expressly cancels.

Exam Year(s)

AIBE - 2026,

Answer: A

The contract is void, because trading with an enemy in war is prohibited and is against public policy.

Once war breaks out and a country is declared an enemy, contracts with its subjects that involve trade or intercourse with the enemy are unlawful. Under Section 23 of the Indian Contract Act, 1872 an agreement whose object is opposed to public policy is void, and trading with the enemy is a recognised head of such public policy, because it may aid the enemy's war effort.

Routing payment through a neutral bank and supplying humanitarian goods do not change the character of the bargain; any lawful exception would have to come from a government licence, not from the parties. The contract is void from the outset, not merely voidable or valid until cancelled.

Discuss in Forum

Loading…

Void and Voidable Agreements Questions and Answers

Topics

Other Subjects

About Us

Void and Voidable Agreements Questions and Answers

Topics

Other Subjects

About Us

Stay informed about all important Dates & Notifications