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Corporate Legal Framework

Notes Some other agreements which are declared to be void are explained below:

Agreements against Public Policy (Secs.26-28)

An agreement which conflicts with morals of the time and contravenes any established interest

of society is void as being against public policy. Some of the agreements which are against public
policy and have been declared to be void by law. These are as follows:
(i) Trading with enemy,
(ii) Agreements for stifl ing prosecution,
(iii) Contracts in the nature of champerty and maintenance,

(iv) Agreement for the sale of public offices and titles are void,
(v) Agreements in restraint of parental rights are void,
(vi) Agreements in restraint of marriage of any person other than a minor is void.

Agreement in Restraint of Trade

Sec.27 provides that “every agreement by which any one is restrained from exercising a lawful
profession, trade or business of any kind is, to that extent, void”. All agreements in restraint of
trade, whether general or partial, qualifi ed or unqualifi ed, are void. It is, therefore, not open to
the courts to enter into any question of reasonableness or otherwise of the restraint [Khemchand
v. Dayaldas, (1942) Sind, 114].

1.8 Performance of Contract

A contract creates obligations. ‘Performance’ of contract means the carrying out of obligations
under it. The parties to contract must either perform or offer to perform their respective promises
unless such performance is dispensed with or excused under the provisions of the Indian Contract
Act, or some law. It may happen that the promisor offers performance of his obligation under the
contract at the proper time and place but the promisee refuses to accept the performance. This
is called as ‘Tender’ or ‘Attempted Performance’. The promise may be performed by promisor
himself or his agent or by his legal representative.

1.8.1 Joint Performance of Promises

There are many types of joint performance of promises such as devolution of joint liabilities,
liabilities of joint promisors, right of contribution amongst joint promisors, release of joint
promisor and devolution of joint rights.

1. Devolution of joint liabilities: When two or more persons have made a joint promise,
then, unless a contrary intention appears from the contract, all such persons jointly must
fulfill the promise. In the event of death of any of them, his representative jointly with the

survivor or survivors and in case of the death of all promisors, the representatives of all of

them jointly must fulfill the promise.
2. Liabilities of joint promisors: When two or more persons make a joint promise, the
promisee may, in the absence of an express agreement to the contrary, compel anyone or
more of such joint promisors to perform whole of the promise. Thus, the liability of joint
promisors is joint as well as several.

Example: A, B and C jointly promise to pay D ` 3,000. D may compel either A, or B or C
or any two of them to pay him ` 3,000.

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