Distinction explained between Void, Voidable and Void Ab Initio contracts

difference between void agreement and void contract
difference between void agreement and void contract

This can be helpful if one party needs to back out of the contract for any reason. Void contracts can also be used to cancel other types of contracts, such as leases or purchase agreements. Voiding a contract can have serious consequences, so it is important to seek legal advice before taking this step.

Thus, in the case of non-compliance of any one or more, essentials of a contract, during its creation, the agreement becomes void. Another common reason for a void contract is the impossibility of performance. It occurs when any aspect of the contract becomes impossible to carry out by one of the parties. A promises B to sell his horse after one month to B for Rs. 50,000. Now, the contract becomes void as the contract cannot be performed, i.e. the object on which the parties agreed is no more, so there is an impossibility of performance of the contract. Voidable Contract is the contract which can be enforceable only at the option of one of the two parties to the contract.

We’ve helped more than 6 million clients find the right lawyer – for free. LegalMatch matches you to pre-screened lawyers in your city or county based on the specifics of your case. Within 24 hours experienced local lawyers review it and evaluate if you have a solid case. If you find yourself needing to have a contract voided, you should refer to your copy of the contract, as well as any other important documents from the contract formation process. Additionally, you should keep records of receipts, bills, and other documents proving any losses that you have incurred as a direct result of being involved with the contract.

Although both a void agreement and a void contract are legally unenforceable, the reasons for their unenforceability are different. In this article, we will explore the difference between void agreement and void contract in detail. To clarify the major differences, void contracts are invalid from the start, while voidable contracts can be canceled or kept as they are by one of the parties. Section 2 of the Indian Contract Act, 1872 defines Void Contract as a contract that no longer remains a valid contract and cannot be enforced in the court of law. Such contracts do not have any legal effect and cannot be enforced by either party. Sometimes an agreement which is enforceable by law, i.e, a contract, can become void.

Other Considerations

This article points out the difference between a void contract and a void agreement. In some cases, the court may allow parts of the contract to be rewritten. Legal remedies will vary, depending on the circumstances of the contract. An example of a voidable contract would be a contract entered into by a minor, as previously mentioned. Oral contracts are more challenging to enforce and should be avoided whenever possible. Some jurisdictions do not recognize oral contracts as legally enforceable at all.

However, upon shutting down his shop, the plaintiff was denied payment by the defendant. The court here, ruled that the defendant did not own any money to the plaintiff since the agreement was void , even though it imposed partial restraint difference between void agreement and void contract i.e. extended to only a particular locality. Unenforceable contracts are considered as unenforceable by law due to some technical issues or natural disaster. The contract cannot be enforced against any of the two parties.

3.VOID CONTRACT Void contract is defined by Section 2 viz., a contract which is legally enforceable when entered but become void due to supervening impossibility of performance. A void contract is not void from the beginning, it becomes void at a subsequent stage due to the occurrence of an event or change in the original conditions. A, an Indian, enters into a contract with B, a Pakistani national, to supply woolen carpets after three months.

difference between void agreement and void contract

A void contract is a contract that isn’t legally enforceable, starting from the time it was created. While both a void and voidable contract are null, a void contract cannot be ratified. In a legal sense, a void contract is treated as if it was never created and becomes unenforceable in court. A void agreement is not enforceable by law since the time of its creation and is said to be void or null. This implies that it cannot be acted out and does not bind any single party nor can it be enforced forcefully by one party on another. According to section 2 of Indian Contract Act, 1872, these agreements do not confer any rights to either party and cannot be tested in the court.

Void Agreement | Meaning | Void Agreement vs Voidable Contract

Voidable contracts differ from void contracts in that they can be carried out legally if both parties wish to do so. The law strictly prohibits such agreements, hence entering into an illegal agreement is called a punishable offence in the eyes of law. Therefore, the parties are penalised for the same, under Indian Penal Code. Some examples of an illegal agreement are like an agreement whose terms are not certain, or an agreement to kill someone, etc. X says to Y, that he should sell his new bungalow to him at a nominal price otherwise, he will damage his property and Y enters into a contract due to fear. In this situation, the contract voidable as the consent of Y is not free, so he has the right to avoid the performance of his part.

The court ruled that the contract was vague because there was no process in place to determine how the horse would bring luck to the party. In 2017 from the University of Houston Law Center and his B.A. Travis has written about numerous legal topics ranging from articles tracking every Supreme Court decision in Texas to the law of virtual reality. Each state maintains different laws regarding contracts, business matters, and commerce regulation.

  • An attorney can review the terms of the contract to ensure they are in your best interests, and advise you against signing anything that could be unenforceable later on.
  • In such instances, void contracts (also referred to as „void agreements“), involve agreements that are either illegal in nature or in violation of fairness or public policy.
  • However, a voidable contract starts out as a valid contract.
  • Some kinds of agreements are declared void by law due to them being unlawful and opposed to public policy, and also to protect the life and liberty of individual persons.
  • In void contract, no party can claim any damages for the non-performance of the contract.

Void contract and voiadable contract are quite commonly miscontrued, but they are different. In a void agreement, the prerequisite conditions are not met if there is impossibility to perform or the contract is with minor, lunatic or alien enemy. Every illegal agreement is void, but not every void agreement is illegal.

Section 2 of the Indian Contract Act, 1872 (hereinafter “The Act”) defines agreement and Section 2 defines a contract. From the definitions given in the two subsections of Section 2, it is evident that a contract cannot be created until and unless there is a valid agreement in place and this particular agreement is backed by consideration. One of the main reasons a contract would be made void is if one of the parties is incapacitated and not allowed to join a contract. Consideration means that both parties agree to provide something of value in the agreement they sign (money, car, property, manual labor, etc.).

I guess that the writer is a man of deep knowledge concerning the Contact Act. The better explanation including examples are unquestionable on the subject matters…. In void contract, no party can claim any damages for the non-performance of the contract.

difference between void contracts and void agreement

A void contract is a contract which is not enforceable in the court of law. At the time of formation of the contract, the contract is valid as it fulfills all the necessary conditions required to constitute a valid contract, i.e. free consent, capacity, consideration, a lawful object, etc. But due to a subsequent change in any law or impossibility of an act, which are beyond the imagination and control of the parties to the contract, the contract cannot be performed, and hence, it becomes void. Further, no party cannot sue the other party for the non-performance of the contract. A void agreement is defined under section 2 of Indian Contract Act, 1872, as an agreement which cannot be enforceable by law, i.e. such agreements cannot be challenged in the court of law. Such an agreement lacks legal consequences, and so, it does not confer any rights to the parties concerned.

Section 54, which prevents all the partners from engaging in any business of similar kind after dissolution of the firm/business. Section 36, which provides the remaining partners to prevent the outgoing partner from opening any business similar to theirs’ in the same locality subject to certain restrictions. An agreement where both parties are under the mistake of fact, material to the agreement. Determine whether a new contract can be drafted or whether the agreement should be completely abandoned altogether. Ensure all available information relating to the contract is collected (e.g., communication between parties, signed documents, etc.).

She has held prestigious positions in the Student Council and been adjudged the ‘Student of the Year 2016, Gurgaon’ by UnivQuest. She has formerly served as a legal intern at ubadvocate, where her performance was marked “outstanding” by the team and is an Editor at The Wall of Justice blog. She is also an avid reader, a poet, and a political enthusiast. Above all, she is a dedicated and dynamic soul, ever-prepared to undertake challenging roles in the legal battlefield, and treats constructive criticisms as stepping stones towards progress.

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Agreements entered into by minors or for illegal activities may also be rendered void. The contract becomes valid until the aggrieved party does not cancel it. Moreover, the party aggrieved party has the right to claim damages from the other party. Tazeen Ahmed is a first-year law student at Jamia Millia Islamia, New Delhi, inquisitive about Constitutional Law, Family Law, Corporate Law, Human Rights Law, and Criminal Law. She is a proficient writer, skilled in conducting legal research and organizing her articulations on social-legal and political issues. She holds a sound academic record, having scored 93.80 % in AISSE and 95% in both Political Science and English Language in AISSCE.

Generally speaking, the court will entirely cancel such contracts. No damages are available for breach of a void contract due to the fact, essentially, there was no contract to breach. If you need help with the difference between void and illegal contract, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

A quasi contract is court-created legal agreement between two parties who did not have a previous obligation to each other. Void contracts arise for many reasons, including unlawful consideration. A contract which lacks the free will of one of the parties to the contract is known as Voidable Contract. V.L. Narasu v. P.S.V. lyer – In this case, one of the walls of a cinema hall collapsed. It then became dangerous for customers to visit and avail the services.

Voidable contract:

Thus a void agreement can never change into a binding contract. As specified in Section 2 of the Indian Contract Act, 1872, void contracts are contracts that are legally enforceable at the time of their creation but are annulled afterwards. In conclusion, there is an important difference between a void agreement and a void contract. A void agreement is invalid and unenforceable from the outset, whereas a void contract is valid until something happens to make it void. Both a void agreement and a void contract are legally unenforceable, but the remedies available for a breach of each are different. Unlike a void agreement, a void contract can be enforced until something happens to make it void.

If there were no such provision, it would lead to gross injustice and unfairness. Hence, any contract formed inadvertently, involuntarily, or by illegal means is unenforceable in a court of law. The terms void and voidable are frequently misunderstood and used interchangeably.

Some illegal agreements, including the murder for hire example, are crimes by themselves. The effects of a void agreement and a void contract are similar in that they are both legally unenforceable. This means that any action taken in reliance on the agreement or contract is void. A void agreement and void contract are two common legal concepts, but there is a subtle yet important difference between them.


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