Agreements in Restraint of Legal Proceedings are Void

Section 28b of the Indian Contract Act

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According to Section 28b of the Indian Contract Act 1872, inserted via the Indian Contract Amendment Act 1997, agreements in restraint of legal proceedings are void.

This means that any agreement that restricts a party from enforcing their legal rights is not enforceable.

Exceptions

There are a few exceptions to this rule, including:

• Agreements to refer disputes to arbitration
• Agreements to settle disputes that have already arisen
• Agreements to compensate for something done or to be done

Recommendation

In light of all the relevant factors, it is recommended that Section 28 of the Indian Contract Act 1872 be amended to:

• Explicitly state that agreements in restraint of legal proceedings are void
• Include exceptions for agreements that are necessary to protect legitimate interests, such as agreements to refer disputes to arbitration