Under section 27 of the Indian Contract Act, 1872, what is the legal effect of a restraint on a lawful…
Section 27 makes an agreement void to the extent that it restrains a lawful profession, trade or business within the statutory prohibition. The section recognises a…
Choose your answer
Under section 27 of the Indian Contract Act, 1872, what is the legal effect of a restraint on a lawful profession, trade or business that falls within the prohibition and outside its exceptions?
Answer and explanation
Correct answer A
Section 27 makes an agreement void to the extent that it restrains a lawful profession, trade or business within the statutory prohibition.
The section recognises a qualified exception for sale of goodwill. The question excludes the exceptions.
Option feedback
Option A
This is the legal effect stated in section 27.
Option B
Voidability would require a party's election to avoid the restraint, whereas the prohibited restraint is void to that extent.
Option C
Free consent does not remove the section 27 prohibition.
Option D
The parties' business status by itself supplies no exception.
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