An agreement in restraint of trade under Section 27 of the Indian Contract Act, 1872 is

Solution (By Examveda Team)

Section 27 of the Indian Contract Act, 1872:
This section deals with agreements in restraint of trade. An agreement in restraint of trade is essentially a contract that restricts a party's freedom to conduct their business or profession in a certain way.

Explanation:
The correct answer is C: Void.

Section 27 explicitly declares that every agreement in restraint of trade is void. This means the agreement is not legally enforceable and has no legal effect. The law recognizes the importance of free competition and individual liberty to pursue their chosen occupation or trade. Agreements that restrict this freedom are considered against public policy and thus invalid.

Why other options are incorrect:
Option A: Valid: This is incorrect because Section 27 specifically states that such agreements are void, not valid.

Option B: Voidable: A voidable contract is one that can be made void by one of the parties. An agreement in restraint of trade is not voidable; it's automatically void from the outset. There's no need for a party to take any action to nullify it.

Option D: Enforceable: This is incorrect because a void contract, by definition, cannot be enforced by any court of law.

Exceptions (Important Note):
While Section 27 generally renders agreements in restraint of trade void, there are some limited exceptions. These exceptions are specifically carved out within the section itself and typically relate to:
* Sale of goodwill of a business
* Partnerships agreements regarding restrictions on partners' activities after dissolution
* Employment contracts with reasonable restrictions on employees (e.g., non-compete clauses with limited scope and duration).
Even within these exceptions, the restraints must be reasonable in terms of scope, duration, and geographical area. Unreasonable restraints, even in these exceptional cases, will still be considered void.