Agreements Restraining Legal Proceedings Declared Void
Indian Contract Act Amendment
Key Points:
- Section 28b of the Indian Contract Act 1872, inserted in 1997, prohibits agreements that absolutely restrict parties from enforcing legal rights.
- Exceptions include agreements to refer disputes to arbitration, whether future or existing.
- Unconsidered agreements are also void unless they are in writing, registered, or involve a promise to compensate for past actions.
The Indian Contract Act has been amended to invalidate agreements that restrict parties from pursuing legal proceedings. This amendment aims to protect parties' rights to seek legal remedies and prevent the suppression of disputes.
The amendment, known as Section 28b, clarifies that any agreement that absolutely bars a party from enforcing their legal rights is void.
However, the amendment does not prohibit agreements to refer disputes to arbitration. Parties are free to agree to resolve future or existing disputes through arbitration as an alternative to litigation.
Additionally, the amendment states that agreements without consideration are void unless they are in writing and registered, or if they involve a promise to compensate for something already done.
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