Contract in restraint of trade is 

The correct answer is Option 1.

Key PointsSection 27 of Indian Contact Act 1872: Agreement in restraint of trade, void.

• Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.

Exception 1 – Saving of agreement not to carry on business of which good-will is sold.One who sells the good-will of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the good-will from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business.

• The reasoning behind this principle is to ensure fair competition, protect individual freedom to work, and prevent monopolies or unfair business practices.
• Some agreements that limit trade may be considered valid if they're reasonable and necessary to protect legitimate interests, such as trade secrets, goodwill, or unique expertise.