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Which Section of the Indian Contract Act, 1872 provides that an agreement in restraint of trade is void?

Section 27 of the Indian Contract Act, 1872 ('Agreement in restraint of trade, void') states: 'Every agreement by which any one is restrained from exercising a lawful…

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Which Section of the Indian Contract Act, 1872 provides that an agreement in restraint of trade is void?

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Correct answer A

Section 27 of the Indian Contract Act, 1872 ('Agreement in restraint of trade, void') states: 'Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void,' subject to Exception 1 saving agreements not to carry on a similar business within specified reasonable local limits upon the sale of the goodwill of a business. By contrast, Section 24 deals with considerations and objects unlawful in part, Section 26 deals with agreements in restraint of marriage, and Section 29 deals with agreements void for uncertainty.

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Option A

Correct. Section 27 of the Indian Contract Act, 1872 provides that every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void (subject to the statutory exception for sale of goodwill).

Option B

Incorrect. Section 29 of the Indian Contract Act, 1872 deals with agreements void for uncertainty, not restraint of trade.

Option C

Incorrect. Section 24 of the Indian Contract Act, 1872 provides that agreements are void if considerations and objects are unlawful in part.

Option D

Incorrect. Section 26 of the Indian Contract Act, 1872 provides that agreements in restraint of marriage (other than that of a minor) are void.

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