by Void Contract
A void contract is a contract that is considered to be without legal effect from the moment it is formed. A void contract is not legally binding and has no legal force or effect. There are a number of reasons why a contract may be considered void, including:
- Lack of capacity: If one or more of the parties to the contract lack the legal capacity to enter into a contract, the contract may be considered void. For example, a contract entered into by a minor may be considered void.
- illegal purpose: If the purpose of the contract is illegal, the contract may be considered void. For example, a contract for the sale of illegal drugs would be considered void.
- Duress: If one party was forced to enter into the contract under duress, such as through threats or coercion, the contract may be considered void.
- Fraud: If one party was induced to enter into the contract through fraud or misrepresentation, the contract may be considered void.
- Mistake: If the parties to the contract were mistaken about a material fact, the contract may be considered void.
Unconscionable terms: If the terms of the contract are unconscionable or so one-sided as to be oppressive, the contract may be considered void.
It is important to note that a void contract is different from a voidable contract. A voidable contract is a contract that is initially valid, but can be voided by one or more of the parties due to a defect or issue with the formation or execution of the contract. In contrast, a void contract is considered to be invalid from the moment it is formed.
If a contract is considered void, it cannot be enforced by either party and any performance or consideration given under the contract must be returned.
Examples:
An example of a void contract would be a contract for an illegal purpose. For instance, if two parties enter into a contract to sell or buy illegal drugs, the contract would be considered void from the beginning. This is because the purpose of the contract is illegal, and the law does not recognize any agreement related to an illegal purpose.
Another example of a void contract could be a contract entered into by a minor. Minors are not considered to have the legal capacity to enter into a contract in many jurisdictions. If a minor enters into a contract, the contract may be considered void from the beginning unless there are some exceptions or laws that apply to the situation.
Similarly, a contract that is based on fraud or misrepresentation may also be considered void. For example, if one party makes false statements or conceals information to induce the other party to enter into a contract, the contract may be considered void from the beginning.
Voidable Contract
A voidable contract is a contract that is initially valid and enforceable, but which may be later voided or canceled by one or more of the parties due to a defect or issue with the formation or execution of the contract. This means that the contract is not automatically void, but can be made void at the option of the party with the right to void the contract.
If a contract is found to be voidable, the party with the right to void the contract has the option to either void or affirm the contract. If the party chooses to void the contract, then the contract is considered null and void, and the parties must return any performance or consideration given under the contract. If the party chooses to affirm the contract, then the contract remains in force and is binding on both parties.
It is important to note that the ability to void a contract may be subject to time limits or other legal requirements, and that the specific requirements for voiding a contract may vary depending on the laws of the jurisdiction in which the contract was formed.
The Reasons that a contract may be voidable include:
- Lack of capacity: If one or more of the parties to the contract lack the legal capacity to enter into a contract, the contract may be voidable. For example, a contract entered into by a minor may be voidable at the option of the minor.
- Duress: If one party was forced to enter into the contract under duress, such as through threats or coercion, the contract may be voidable at the option of the party subjected to the duress.
- Fraud: If one party was induced to enter into the contract through fraud or misrepresentation, the contract may be voidable at the option of the party defrauded.
- Mistake: If the parties to the contract were mistaken about a material fact, the contract may be voidable at the option of the party who was mistaken.
- Undue influence: If one party exerted undue influence over the other party to enter into the contract, the contract may be voidable at the option of the party subjected to the undue influence.
Voidable Contract examples:
- Contracts entered into by minors: Minors do not have the legal capacity to enter into a contract in many jurisdictions, and contracts entered into by minors are often voidable at the option of the minor. For example, if a minor enters into a contract to purchase a car, they may have the option to void the contract if they wish to do so.
- Contracts entered into under duress: If one party was forced to enter into a contract under duress, such as through threats or coercion, the contract may be voidable at the option of the party subjected to the duress. For example, if a party is threatened with physical harm if they do not enter into a contract, they may have the option to void the contract.
- Contracts entered into based on fraudulent misrepresentation: If one party was induced to enter into the contract through fraud or misrepresentation, the contract may be voidable at the option of the party defrauded. For example, if a party is induced to enter into a contract based on false information or lies told by the other party, they may have the option to void the contract.
- Contracts entered into based on mistake: If the parties to the contract were mistaken about a material fact, the contract may be voidable at the option of the party who was mistaken. For example, if the parties to a contract believe that a particular product is in stock and available for sale, but it turns out that the product is not actually available, the contract may be voidable at the option of the party who was mistaken.
- Contracts entered into by parties lacking mental capacity: If one or more parties lack the mental capacity to enter into a contract, the contract may be voidable at the option of the party lacking capacity. For example, if a person enters into a contract while they are under the influence of drugs or alcohol and do not have the mental capacity to understand the terms of the contract, they may have the option to void the contract.
Key Differences Between Void Contract and Voidable Contract
| Key Differences | Void Contract | Voidable Contract |
| Definition | A void contract is one that is not legally enforceable and has no legal effect. | A voidable contract is one that is initially valid, but can be voided by one of the parties involved. |
| Formation | A void contract is usually deemed invalid from the outset. | A voidable contract is initially valid and binding on the parties. |
| Legal effect | A void contract has no legal effect and cannot be enforced by either party. | A voidable contract remains valid until it is voided by the party with the right to do so. |
| Rights of the parties | The parties to a void contract have no legal obligations to each other. | The parties to a voidable contract are bound by the terms of the contract until it is voided by the party with the right to do so. |
| Restoration | In the case of a void contract, the parties may be required to restore any benefits they received under the contract. | In the case of a voidable contract, the parties may be required to restore any benefits they received under the contract after it is voided. |
| Legal action | A void contract cannot be enforced by either party, so legal action is generally not taken. | In the case of a voidable contract, legal action may be taken by the party seeking to void the contract. |
| Examples | Contracts that are illegal, against public policy, or entered into by a party who lacks legal capacity. | Contracts entered into by a minor, contracts induced by fraud, or contracts entered into under duress. |
Similarities Between Void Contract and Voidable Contract
- Both types of contracts are initially defective in some way, which may render them unenforceable.
- Both types of contracts may result in the parties being released from their obligations under the contract.
- Both types of contracts may require the parties to return any benefits they received under the contract.
- Both types of contracts may result in the parties being restored to their pre-contractual positions.
- Both types of contracts may require one or both parties to take legal action to resolve the issue.
- Both types of contracts may result in damages being awarded to the injured party.
Laws governing Void Contract and Voidable Contract
In many jurisdictions, void and voidable contracts are governed by different legal principles. Here’s an overview of the laws governing void and voidable contracts:
- Void contracts: A void contract is one that is not enforceable by law, and therefore has no legal effect. Void contracts are typically considered to be invalid from the outset, and cannot be made valid by any subsequent act or agreement of the parties. Some common examples of void contracts include contracts that involve illegal activities, contracts that violate public policy, and contracts that involve fraudulent misrepresentation.
- Voidable contracts: A voidable contract is one that is initially valid, but can be voided by one of the parties involved. Voidable contracts are typically considered to be enforceable until they are voided by the party with the right to do so. Some common examples of voidable contracts include contracts that are entered into by minors, contracts that are induced by fraud, and contracts that are entered into under duress or coercion.
The legal principles governing void and voidable contracts may vary depending on the jurisdiction, but there are some general principles that are commonly applied. For example, a contract that is found to be void may be treated as if it never existed, and the parties involved may be required to return any benefits that they received under the contract. In contrast, a contract that is found to be voidable may be rescinded or cancelled by the party with the right to do so, and the other party may be required to return any benefits that they received under the contract.
It is important to note that the laws governing void and voidable contracts can be complex, and may involve other legal concepts such as mistake, undue influence, or unconscionability. If you have questions about void or voidable contracts, it is recommended that you seek legal advice from a qualified attorney.
