Which section of the Indian Contract Act deals with agreements in restraint of trade?

Prepare for the CA Foundation Business Law Exam with our comprehensive quiz. Utilize flashcards and multiple-choice questions, each complete with hints and explanations. Ace your exam confidently!

The section of the Indian Contract Act that addresses agreements in restraint of trade is Section 27. This section clearly outlines that any agreement that restrains a person from exercising a lawful profession, trade, or business of any kind is void to that extent. However, it also provides exceptions, noting that a person may agree not to carry on a business in a particular area for a limited time in connection with the sale of a business, or not to solicit customers within a certain period after the termination of a contract, which affirms that some level of restriction can be permissible under specific circumstances.

Understanding this section is crucial, as it balances the need for individual freedom in trade and business with the rights of others to engage in free trade. This legal framework serves to prevent monopolistic practices and to maintain fair competition in the market.

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