Chapter IV - Of the Performance of Contracts
Section 65
Section 65: Restoring benefits under a void agreement
Section 65 concerns restoration of advantages when an agreement is discovered to be void or a contract becomes void. It prevents the legal failure of the arrangement from automatically resolving every benefit already exchanged in the recipient's favour.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.
Illustrations
(a) A pays B 1,000 rupees in consideration of B’s promising to marry C, A’s daughter. C is dead at the time of the promise. The agreement is void, but B must repay A the 1,000 rupees.
(b) A contracts with B to deliver to him 250 maunds of rice before the first of May. A delivers 130 maunds only before that day, and none after. B retains the 130 maunds after the first of May. He is bound to pay A for them.
(c) A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B engages to pay her a hundred rupees for each night’s performance. On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract. B must pay A for the five nights on which she had sung.
(d) A contracts to sing for B at a concert for 1,000 rupees, which are paid in advance. A is too ill to sing. A is not bound to make compensation to B for the loss of the profits which B would have made if A had been able to sing, but must refund to B the 1,000 rupees paid in advance.
Rule and business relevance
A person who received an advantage under such an agreement or contract must restore it or compensate the person from whom it was received. The illustrations distinguish restoring an advance from awarding expected profits on performance that became impossible.
Limits and related provisions
Do not assume every unlawful arrangement or every failed negotiation produces an identical restitution claim. The statutory trigger, advantage received and applicable legal limitations need assessment. Restoration is distinct from breach damages and may require different evidence.
Hypothetical business example
Hypothetical: an agreed performance becomes impossible after an advance was paid. The recipient assesses return of the advance under Section 65 separately from whether the other party can recover hoped-for profits.
Practical decision flow
Establish whether the agreement was discovered void or the contract became void.
Trace each advantage received, its provider and any benefit already restored.
Assess restoration or compensation under the applicable law without conflating it with breach damages.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Establish whether the agreement was discovered void or the contract became void.
- Trace each advantage received, its provider and any benefit already restored.
- Assess restoration or compensation under the applicable law without conflating it with breach damages.
Avoid
- Do not assume every unlawful arrangement or every failed negotiation produces an identical restitution claim. The statutory trigger, advantage received and applicable legal limitations need assessment. Restoration is distinct from breach damages and may require different evidence.
Glossary
- Advantage received
- The benefit obtained under the agreement or contract addressed by the provision.
- Restitution
- Restoring the benefit or compensating its provider on the statutory basis.
Frequently asked questions
Is restoration the same as expected-profit damages?
No. The statutory illustrations distinguish them.
Does the provision identify both initially void and later-void situations?
It refers to an agreement discovered to be void and a contract that becomes void.
Can every benefit claim be decided from the fact of invalidity alone?
No. The trigger, receipt and applicable limitations must be examined.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026