Legal Principle: Agreements in restraint of trade are void and unenforceable. Fact Situation: Manu has been working as a blacksmith in his village for many decades. Somu has been undergoing training with him for the past three years. After his training is over, Somu enters into an agreement with Manu that he will not start a competing business in the same village while Manu is alive. Which of the following statements is the most appropriate in relation to the legal principle stated above?

Option A: This agreement is void and unenforceable since it is a restraint on trade.

Option B: This agreement is valid and enforceable since Manu is Somu’s teacher.

Option C: This agreement is valid but not enforceable after Manu’s death.

Option D: This agreement is valid and enforceable since it is to protect Manu’s interest in consideration for teaching Somu to be a blacksmith.

Correct Answer

Option: a

Explanation

Section 27 of the Indian Contract says that 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.

Sample Mock Tests for Practice

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