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abhijit majumder (practicing company secretary)     03 November 2023

Inclusion of restrictive clause in the agreement


The  respected fellow experts


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?






 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 and Legal Consultant)     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.



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?

  • The subject of the contract is illegal. ...
  • The terms are vague or impossible to fulfill. ...
  • Lack of consideration. ...
  • Fraud.

Your case falls under one of the above clause. 

Therefore the agreement is not enforceable. 

abhijit majumder (practicing company secretary)     09 November 2023

Thanks to Sir T Kalaiselvan for enrich my knowledge.



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