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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…

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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?

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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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