Section 26

Section 26 of the Indian Contract Act, 1872, states that every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void to that extent. According to this section, 'Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void to that extent.' However, there are exceptions to this rule, such as where a person sells the goodwill of a business and agrees to refrain from carrying on a similar business, or where a partner in a firm agrees not to carry on a similar business after dissolution of the firm. The court in the case of Percept D'Mark (India) (P) Ltd. v. Zaheer Khan held that an agreement that restricts a person from carrying on a trade or business is void, unless it falls under one of the exceptions.