Question

Trade combinations are exempted under Section 27 of the Contract Act, 1872 on the ground that

• A. No exemption is provided to such combinations.
• B. The primary purpose of such combinations is to regulate business and not to restrict it.
• C. The exemption is provided statutorily by section 27.
• D. None of the above

Hint:

Trade regulation agreements are valid if they promote fair competition and do not create a monopoly.

Answer 1

The Correct Option is B

Step 1: Understanding Section 27.
Section 27 of the Indian Contract Act declares agreements in restraint of trade as void, but trade combinations that aim to regulate trade (not restrict it) are exceptions.
Step 2: Evaluate options.
(a) Incorrect — there is an exemption for genuine trade regulation.
(b) Correct — exemption applies if the objective is regulation, not restriction.
(c) Misleading — Section 27 is the provision, but the reasoning is as in (b).
(d) Incorrect — correct reasoning exists. \[ \boxed{(b)} \]