Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
References:["DECEASED BECHARBHAI NATHUBHAI PATEL ALIAS ANDHAN V/s CHIMANBHAI MAGANBHAI PATEL - Gujarat"]["Arshiya Limited vs Ascendas Panvel FTWZ Ltd. - National Company Law Tribunal"]["SAMAR SENGUPTA vs STATE OF WEST BENGAL AND ORS. - Calcutta"]["TELITI DATACENTRES SDN BHD vs REGAL ORION SDN BHD (ENCL 58) - High Court"]["CHUA HENG HONG & ORS vs S LITE ELECTRICAL AND ENGINEERING SDN BHD & ANOR AND ANOTHER CASE - High Court"]["TELITI DATACENTRES SDN BHD vs REGAL ORION SDN BHD (ENCL 58) - High Court"]["KANDIAH et al. v. TAMBIPILLAI"]
In the world of business and consumer agreements, fairness is paramount. But what happens when a contract includes clauses that seem overly harsh, one-sided, or downright oppressive? A common question arises: an agreement with oppressive clauses void or not? Under Indian law, such clauses are generally considered void or unenforceable, especially if they violate principles of equity, public policy, or statutory protections. This blog post dives deep into the legal framework, judicial precedents, and practical insights to help you navigate these issues.
Disclaimer: This article provides general information based on legal principles and is not a substitute for professional legal advice. Consult a qualified lawyer for your specific situation.
Contracts are the backbone of commercial transactions, but not all terms are enforceable. An agreement containing oppressive, unfair, or unconscionable clauses is generally void or unenforceable, particularly when they breach fairness, public policy, or constitute unfair trade practices. IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12Jacob Punnen VS United India Insurance Co. Ltd. - 2022 1 Supreme 304
Key characteristics include:- One-sided terms: Clauses that disproportionately favor one party, leaving the other with no real choice.- Harsh penalties: Excessive fines or restrictions that exploit weaker parties, such as consumers or small businesses.- Inequality of bargaining power: Common in standard form contracts where the weaker party must accept terms without negotiation. IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12
Courts have consistently ruled that such clauses violate public policy and are thus void. For instance, clauses that are one-sided, unfair, unreasonable, or that leave no real choice to the weaker party are considered to violate public policy and are thus void. IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12Jacob Punnen VS United India Insurance Co. Ltd. - 2022 1 Supreme 304
The Consumer Protection Act, 1986, defines unfair trade practices under Section 2(1)(r) as including adopting unfair methods or practices for the purpose of promoting sale, which encompasses unfair, deceptive, or oppressive clauses. IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12 Courts have declared contractual terms that are harsh, oppressive or unconscionable to one of the parties as substantively unfair and null and void. Jacob Punnen VS United India Insurance Co. Ltd. - 2022 1 Supreme 304
The Supreme Court and National Consumer Disputes Redressal Commission (NCDRC) have struck down clauses in real estate deals, like those restricting flat purchasers' rights or imposing disproportionate penalties, labeling them oppressive. IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12Jacob Punnen VS United India Insurance Co. Ltd. - 2022 1 Supreme 304
Indian courts invoke Section 23 of the Indian Contract Act, 1872, which voids agreements opposed to public policy. For example, lease agreements contravening statutes like the U.P. Urban Buildings Act are unenforceable. NUTAN KUMAR VS IIND ADDITIONAL DISTRICT JUDGE, BANDA - 1993 0 Supreme(All) 310
The doctrine of unconscionability addresses inequality, duress, or undue influence. Contracts entered into under circumstances of inequality, duress, or undue influence are unconscionable and may be set aside. IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12 This is especially relevant in standard form contracts where the weaker party is compelled to accept unfair terms.
In arbitration contexts, unfair clauses limiting rights unreasonably are struck down. Shin Satellite Public Co. LTD. VS Jain Studios LTD. - 2006 2 Supreme 10 Similarly, agreements void for coercion bear the onus on the alleging party to prove duress, as an agreement brought into existence by coercion or duress is void. M. R. B. Engineers and Contractors VS Modern Diaries - 2011 Supreme(P&H) 1794
Not every unfair clause dooms the entire agreement. Courts apply the principle of severability: if oppressive clauses can be excised, the remaining contract stands valid. Shin Satellite Public Co. LTD. VS Jain Studios LTD. - 2006 2 Supreme 10IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12 This balances fairness without undermining legitimate transactions.
Oppressive clauses often intersect with other grounds for voiding agreements under the Indian Contract Act:
Lack of Consideration (Section 25): An agreement made without consideration is void, unless it is expressed in writing and registered... or is a promise to pay a debt barred by limitation law. Kotak Mahindra Bank Limited VS Kew Precision Parts Private Limited - 2022 7 Supreme 71Placido Francisco Pinto (D) By Lrs VS Jose Francisco Pinto - 2021 6 Supreme 529 Oppressive terms might mask inadequate consideration, rendering parts void unless exceptions apply, like natural love and affection between near relatives. Placido Francisco Pinto (D) By Lrs VS Jose Francisco Pinto - 2021 6 Supreme 529
Uncertainty (Section 29): Agreements, the meaning of which is not certain, or capable of being made certain, are void. TILAK RAJ VS GORA MAL HARI RAM P. LTD. - 2012 Supreme(Del) 1529 Vague oppressive clauses could fall here if unworkable.
Time-Barred Debts and Novation: Promises to pay time-barred debts are enforceable if in writing, but underlying oppression might still invalidate them. Kotak Mahindra Bank Limited VS Kew Precision Parts Private Limited - 2022 7 Supreme 71
Cases like those involving conditional payments in share sale agreements highlight statutory voids, such as under the Construction Industry Payment and Adjudication Act (CIPAA), where Clause 9.3... is void under Section 35 of the CIPAA. CHUA HENG HONG & ORS vs S LITE ELECTRICAL AND ENGINEERING SDN BHD & ANOR AND ANOTHER CASE
Contracts between parties of equal bargaining power, with genuine negotiation, are less likely to be voided. Exceptions include:- Registered agreements for natural love and affection. Placido Francisco Pinto (D) By Lrs VS Jose Francisco Pinto - 2021 6 Supreme 529- Promises compensating voluntary acts or barred debts. Kotak Mahindra Bank Limited VS Kew Precision Parts Private Limited - 2022 7 Supreme 71- Situations without proven coercion, where the onus lies on the claimant. M. R. B. Engineers and Contractors VS Modern Diaries - 2011 Supreme(P&H) 1794
To avoid pitfalls:- Draft Balanced Clauses: Ensure reasonableness and mutual benefit; scrutinize one-sided terms.- Include Severability Clauses: Preserve the contract if parts are invalid. Shin Satellite Public Co. LTD. VS Jain Studios LTD. - 2006 2 Supreme 10- Seek Legal Review: Especially for standard forms affecting consumers or weaker parties.- Document Negotiations: Evidence of bargaining counters inequality claims.
Regulatory bodies and courts can declare unfair clauses null, so proactive fairness pays off. IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12
Stay informed and contract wisely. For tailored advice, reach out to a legal expert.
References:1. IREO GRACE REALTECH PVT. LTD VS ABHISHEK KHANNA - 2021 0 Supreme(SC) 12: Unfair trade practices and oppressive clauses.2. Jacob Punnen VS United India Insurance Co. Ltd. - 2022 1 Supreme 304: Law Commission and judicial principles on unconscionable contracts.3. Shin Satellite Public Co. LTD. VS Jain Studios LTD. - 2006 2 Supreme 10: Arbitration clauses and severability.4. NUTAN KUMAR VS IIND ADDITIONAL DISTRICT JUDGE, BANDA - 1993 0 Supreme(All) 310: Public policy in statutory violations.5. Other sources as integrated above.
#OppressiveClauses, #ContractLawIndia, #VoidAgreements
A void agreement is not prohibited by Penal Code, 1860 (IPC), but IPC strictly prohibits an illegal agreement. ... Therefore, when the earlier part of the section speaks of an agreement being discovered to be void it means that the agreement is not enforceable and is, therefore, not a contract. It means that it was void. ... But where even at the time when the agreement is entered into both the pa....
, this Application is filed, challenging the clause in the Lease Deed Agreement and the Framework Agreement, that it is void. ... The lapse of period of limitation does not condone the voidness of the Agreement. ... between the Parties is void. ... In each of these cases, the consideration or object of an agreement is a said to be unlawful. Every agreement of which the object or consideration is unlawful is void. ... SEZ authorities....
Even if the transaction is deemed to be an agreement to enter into a further agreement of lease, it would not be enforceable in law as an agreement to enter into a further agreement is not specifically enforceable. 24. ... However, proceeding on the premise that the said transaction tantamounted to an agreement/contract, as held above, the bar under Section 11 of the Contract Act comes in and the agreement was void ab initio, irresp....
The defects were reported to the respondent as part of the sale transaction and in terms of cluases 7,8,10 and 14 quoted above, the respondent rendered the services to the appellant. But even then, as the appellant says, the machinery could not work properly. ... After having worked the machinery for such a long period, the appellant could not legally claim the replacement of the machinery or compensation, for the reason that the machinery had not run for 12500 hours which was the least run expected by he appellant. ... ....
; (g) that the agreement should be null and void at the expiration of three months from the date of its execution. ... Where a notarially attested agreement relating to the purchase and sale of land provided that the agreement should be null and void at the expiration of three months from the date of its execution- Held, that it was not open to a party, either under section 92 or any other ... Learned counsel for the plaintiffs submitted that the agreement P1....
[2017] 2 AMR 341 , when conditions precedent are not fulfilled within the stipulated time, the agreements become void. ... been declared void. ... [20] Once the agreements were declared void, any claims arising under them including those for deposits, retention sums, and interest, could not stand.
The plaintiff was not satisfied and appealed. Brief Background Facts [4] On 2 March 2018, the plaintiff and the defendant executed two separate agreements, namely a Sale and Purchase Agreement ("SPA") and an Asset Sale Agreement ("ASA"). ... Once an agreement is rendered void, no evidence regardless of its nature or explanation for the non-fulfilment of conditions can revive or validate such agreements. [15] The Court of Appeal in Sivarasa Rasiah & Ors v. ... [20] Once the agreements were declared #H....
If the third and fourth clauses are ignored, the change does not give to 'the agreement a meaning and object different in kind, but only in extent. The severance does not alter the original meaning and effect of the agreement which was to ensure to the plaintiff's a dowry on marriage. ... I do not, however, think that the same considerations apply to clause (4). It is not necessary to decide on the invalidity of either clauses (3) or (4), if the agreement is di....
After all, the tenancy agreement was prepared by a solicitor. This is, therefore, not a case where the contract may be said to be discovered to be void under s 66 of the Contracts Act 1950 . ... It is therefore void. But if I am wrong, I further find that Hong Poh is not entitled to enforce cl 9 of the SSA against SLite. This is due to the lack of privity of contract, given that Hong Poh is not a party to the SSA. ... A: In the CIPAA s 35, it says that there is prohibition against co....
After all, the tenancy agreement was prepared by a solicitor. This is, therefore, not a case where the contract may be said to be discovered to be void under s 66 of the Contracts Act 1950." ... It is therefore void. But if I am wrong, I further find that Hong Poh is not entitled to enforce cl 9 of the SSA against SLite. This is due to the lack of privity of contract, given that Hong Poh is not a party to the SSA. ... A: In the CIPAA s 35, it says that there is prohibition against con....
(2) It is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless. An agreement made without consideration is void, unless—An agreement made without consideration is void, unless—" (1) It is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless
Agreement without consideration void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law. -An agreement made without consideration is void, unless— (1) it is expressed in writing and registered under the law for the time being in force for registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless
(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law:— An agreement made without consideration is void, unless— —An agreement made without consideration is void, unless—" An agreement made without consideration is void, unless— Agree....
In this connection, he relied upon Section 29 of the Indian Contract Act, 1872 which reads as under:- “29. Agreement void for uncertainty -Agreements, the meaning of which is not certain, or capable of being made certain, are void.
The onus to establish coercion or duress, lies upon the person, who alleges such a fact, in this case the petitioner. An agreement brought into existence by coercion or duress is void.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
