Clauses That Limit Your Right to Sue: How Section 28 of the Contract Act Protects Buyers

Tucked into some sale agreements and builder contracts is a sentence a buyer rarely notices: any claim about defects, area or amenities "must be raised within 30 days of possession, failing which it shall be deemed waived." Another clause may say disputes can be decided only in one forum, or only by arbitration. Are these enforceable against a Bengaluru buyer? Section 28 of the Indian Contract Act, 1872 sets the limits on how far a contract can restrict your right to go to court.

This guide explains what Section 28 makes void, the arbitration exceptions it keeps, and how to read these clauses before you sign. The 30-day wording above is an illustration. This is not advice on any agreement.

The short answer. Section 28 says an agreement is void to the extent it absolutely restricts a party from enforcing contractual rights through the usual legal proceedings in the ordinary tribunals, limits the time within which they may do so, or extinguishes rights or discharges a party from liability on the expiry of a specified period so as to restrict enforcement. Exceptions save agreements to refer disputes to arbitration. The trade-off: a buyer is not bound by a clause that shortens the legal time to sue or wipes out claims after a short period, but an arbitration clause can still change where and how a dispute is decided, so read both kinds of clause before signing.

What does Section 28 make void?

Clauses that shut or shorten the door to court. Section 28 reads: "Every agreement, (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or (b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent."

Three types of clause fall within that wording. The first is an absolute bar on going to the ordinary courts. The second is a clause that limits the time within which a party may enforce their rights. The third is a clause that extinguishes rights, or discharges liability, after a specified period so as to restrict enforcement. The words "void to the extent" matter: the offending part fails, not necessarily the whole agreement.

Is a "claims within 30 days or waived" clause enforceable?

To the extent it works the way Section 28 describes, it is void. A clause that says your rights are extinguished, or the other side is discharged from liability, if you do not act within a specified period "so as to restrict any party from enforcing his rights" falls within Section 28(b). A clause that limits the time within which you may enforce your rights through legal proceedings falls within Section 28(a).

That does not mean every notice clause is void. A clause that asks you to report a defect promptly, so it can be inspected and fixed, is different in effect from one that says your right to sue is extinguished if you do not. The test is whether the clause restricts enforcement of your rights in the manner Section 28 describes, which depends on its wording.

Take an illustration. A buyer notices seepage six months after moving in, and the agreement says all claims must be raised within 30 days of possession or are deemed waived. If the clause operates to extinguish the buyer's rights after 30 days so as to restrict enforcement, Section 28(b) makes it void to that extent. The buyer should still report the defect in writing at once and keep evidence.

For new flats under RERA, the statute itself gives allottees defect rights for a defined period after possession. Our guide to RERA's five-year structural defect liability explains that statutory window, and any contract clause on defects should be read against it.

Are arbitration clauses in sale agreements valid?

Generally, yes. Exception 1 to Section 28 says the section "shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred."

Exception 2 says the section shall not "render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration."

So a clause sending disputes to arbitration is not void under Section 28. Before signing, ask where the arbitration would be seated, how the arbitrator is chosen and how fees are shared, because those terms shape the practical cost of any dispute. Whether a particular homebuyer dispute can go to a consumer commission or a RERA authority despite an arbitration clause is a separate question that depends on those laws. Our report on a larger bench ruling on arbitration in a RERA promoter-allottee dispute shows how courts have approached that question.

What about bank guarantees and lender documents?

A narrower exception applies. Exception 3 says Section 28 "shall not render illegal a contract in writing by which any bank or financial institution stipulate a term in a guarantee or any agreement making a provision for guarantee" for extinguishment of rights or discharge of liability on the expiry of a specified period "which is not less than one year" from the date of occurring or non-occurring of a specified event.

For most homebuyers this matters only if a bank guarantee is part of the transaction. The point to note is that the exception is limited to guarantees by banks or financial institutions and requires a period of at least one year; it does not cover ordinary sale agreement clauses between a buyer and a seller or builder.

How should a Bengaluru buyer read these clauses before signing?

Slowly, and with the question "what does this take away from me?" Use this checklist with your lawyer:

1. Search the agreement for words like "waived," "deemed accepted," "shall not be entitled" and "time-barred."
2. Note any clause that limits when you can bring a claim, and ask whether it is meant to restrict legal enforcement.
3. Note any clause that discharges the seller or builder from liability after a fixed period.
4. Check whether disputes go to arbitration, and if so, where, under which rules and who pays the costs.
5. For RERA-registered projects, compare the agreement's defect and complaint clauses with the statutory rights.
6. Ask for clauses that conflict with your statutory rights to be deleted or rewritten before you sign.
7. Whatever the clause says, report defects and disputes in writing promptly and keep proof.

Does Section 28 mean you can ignore deadlines in the agreement?

No, and vague clauses carry their own risk. Section 29 says: "Agreements, the meaning of which is not certain, or capable of being made certain, are void." A dispute clause so loosely drafted that its meaning cannot be made certain helps no one; ask for precise wording on forums, timelines and procedures.

Section 28 makes certain restrictions void "to the extent" they restrict enforcement as described. It does not erase the general law of limitation, which sets the time within which legal proceedings must be brought, and it does not mean prompt notice is unimportant. A buyer who reports problems late may find them harder to prove, whatever the contract says.

The practical lesson is to act early anyway. Section 28 protects your access to the courts from contractual shortcuts, but evidence, notice and statutory time limits still decide many disputes.

Frequently asked questions

Can a sale agreement limit the time I have to sue the seller?

Section 28 of the Indian Contract Act says an agreement is void to the extent it limits the time within which a party may enforce contractual rights by the usual legal proceedings in the ordinary tribunals. A contract cannot validly shorten that time in the way the section describes.

Is a clause that extinguishes my claims after 30 days valid?

Section 28(b) makes an agreement void to the extent it extinguishes a party's rights, or discharges a party from liability, on the expiry of a specified period so as to restrict enforcement of rights. Whether a particular clause does that depends on its wording.

Are arbitration clauses in property agreements void under Section 28?

No. Exception 1 saves agreements to refer future disputes to arbitration, and Exception 2 saves written agreements to arbitrate disputes that have already arisen. Whether a homebuyer can still approach a consumer commission or RERA authority is a separate question under those laws.

Does Section 28 remove the need to act quickly on defects?

No. Section 28 voids contractual restrictions on enforcing rights to the extent described, but the general law of limitation and the need for evidence still apply. Report defects and disputes in writing promptly and keep proof, whatever the agreement says.

This article explains provisions of the Indian Contract Act, 1872 for information only and is not legal advice. Have a lawyer review any agreement's dispute and limitation clauses before you sign.

Last updated 2026-11-10. PropNewz Team.