Q.Under Section 27 of the Indian Contract Act, 1872, an agreement in restraint of trade is:
(A) Always valid and fully enforceable
(B) Void as a general rule, except in specifically recognised situations such as a reasonable restraint on the seller of a business's goodwill
(C) Illegal and punishable in every case
(D) Voidable at the option of either party

Section 27 makes trade-restraint agreements void by default, carving out only a few narrow, specifically recognised exceptions.

Section 27 declares every agreement restraining a lawful trade, profession, or business void, subject to narrow exceptions the Act (and the Indian Partnership Act, 1932) separately recognise — most notably a reasonable restraint on the seller of a business's goodwill from competing within specified local limits, and reasonable restraints agreed between partners.

Option-by-option analysis:

• (A) Incorrect — the general rule is voidness, not validity.
• (B) Correct — void as a general rule, with narrow, specifically recognised exceptions such as the goodwill-sale case. …