abhijit majumder (practicing company secretary) 03 November 2023

Inclusion of restrictive clause in the agreement

The respected fellow experts

Sir

In an a franchise agreement below clause was inserted:

" In case franchisee terminate the agreement prematurely(Initially this agreement is for 5 years) he will be debarred from entering into a new agreement with any person who have similar line of business for a period of 5 years."

Note: franchise agreement is for selling of ready made food items.

My query for the respected fellow experts is ,:

does this clause have any legal standing? Because can any one prevent a person to carry on trade upto a certain period?

Regards

Abhijit

Reply Follow

5 Replies

P. Venu (Advocate) 03 November 2023

The condition, as stated, is against public policy and hence void. Even otherwise, it is vague and also, impossible to be enforced,

Dr. J C Vashista (Advocate ) 04 November 2023

Well analysed, opined and advised by learned expert Mr. P Venu, I endorse.

abhijit majumder (practicing company secretary) 06 November 2023

Thanks to Sir P Venu for clarify the query and Dr. J.C. Vashista for supporting the view.

Regards

Abhijit

T. Kalaiselvan, Advocate (Advocate) 08 November 2023

As per indian contract Act, under section 2(j) of the Act defines a void contract as “A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”. This makes all those contracts that are not enforceable by a court of law as void.

The conditions what has been included is under undue influence or duress. hence may be rendered unenforceable for legal reasons.

What makes a contract null and void?