Section 27 of the Indian Contract Act, 1872, deals with agreements in restraint of trade. According to this section, any agreement that restrains a person from carrying on a lawful profession, trade, or business is void to the extent of the restraint.
In other words, agreements that restrict a person's freedom to engage in a lawful profession, trade, or business are not enforceable under the Indian Contract Act. However, this does not apply to agreements that impose reasonable restrictions, such as those related to the protection of trade secrets or confidential information.
The section also provides an exception for sale of goodwill in a business, where the seller agrees not to carry on a similar business within a specified local limits or time. Such an agreement is valid if it is reasonable with respect to the nature of the business, the area and the duration of the restraint.
The main objective of Section 27 is to ensure that individuals have the freedom to engage in lawful professions, trades or businesses, and to prevent unfair restrictions on competition.
