Cagreement clause
P.C. Joshi
(Querist) 25 February 2013
This query is : Resolved
Dear Friends,
A is employed with B Ltd. for about 4 yrs.then A resigned and company retained him on retainer basis. The term of retainership agrement is 1 year. Either party can terminate the agreement by 30days notice.
There is a cluase in the agrement that during the retianership and one year after termination A can not compete with the company or work for any competitor of the Co.
is this cluase legally valid and enforceabnle against A.
Pls let me know your views.
Thanks & Regards
P.C. Joshi
Kirti Kar Tripathi
(Expert) 26 February 2013
No, Section 27 of contract Act Specifically provides that every agreement by which anyone is restrained from exercising a lawful profession is to that extent void. In the present query, the A is retained on retainership as professional, thus this provision attracts .
prabhakar singh
(Expert) 26 February 2013
All that is law about what you asked reads as:"The Indian Contract Act, 1872
27. Agreement in restraint of trade, void
Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
Exception 1 : Saving of agreement not to carry on business of which good will is sold - One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the court reasonable, regard being had to the nature of the business.
1[***]"
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