by A Valid contract is a legally binding agreement that is enforceable by law. To be valid, a contract must fulfill certain requirements, which include the following:
- Offer and Acceptance: There must be a clear offer by one party and a clear acceptance by the other party. The offer and acceptance must be communicated in a way that is clear and unambiguous.
- Intention to create legal relations: Both parties must have an intention to create legal relations. If the parties do not have this intention, there is no valid contract.
- Consideration: There must be something of value that is exchanged between the parties. Consideration can be money, goods, services or any other thing of value. The consideration must be sufficient but need not be adequate.
- Capacity to contract: The parties to the contract must have the legal capacity to enter into the agreement. This means that they must not be minors, of unsound mind or under duress.
- Free Consent: The consent of the parties must be free and not obtained through fraud, undue influence, coercion, or misrepresentation.
- Lawful object: The object of the contract must be lawful. If the object of the contract is illegal, immoral or opposed to public policy, the contract is not valid.
Void Contract
A void contract is a contract that is not valid from the outset, meaning it has no legal effect and is unenforceable by law.
A void contract is not enforceable by law and therefore neither party can claim any rights or obligations under the contract. If any party has received any benefits under the void contract, they may be required to return those benefits.
It is important to distinguish a void contract from a voidable contract. A voidable contract is a contract that may be rescinded or set aside by one or both parties due to certain defects, such as fraud or undue influence, but is considered valid until it is rescinded. In contrast, a void contract is not valid from the outset and has no legal effect.
A contract may be considered void for a variety of reasons, such as:
- Lack of capacity: If one or both parties lack the legal capacity to enter into a contract, such as a minor or a person of unsound mind, the contract is void.
- illegal Object: If the object of the contract is illegal, such as a contract to commit a crime, the contract is void.
- Mistake of fact: If the contract is based on a mistake of fact, it may be considered void. For example, if a contract is entered into based on a misunderstanding of the facts, it may be void.
- Coercion or undue influence: If one party is forced to enter into a contract due to coercion or undue influence by the other party, the contract is void.
- Fraud or misrepresentation: If one party is induced to enter into a contract based on false or misleading information provided by the other party, the contract may be considered void.
Voidable Contract
A voidable contract is a contract that is legally binding and enforceable, but which may be rescinded or set aside by one or both parties due to certain defects in the formation of the contract. Unlike a void contract, which is considered invalid from the outset, a voidable contract is considered valid until it is rescinded.
If a contract is found to be voidable, the party who wishes to rescind the contract must take action to do so, such as by providing notice to the other party or by seeking a court order. Once a contract is rescinded, it is as if the contract never existed, and both parties are released from any obligations under the contract.
It is important to note that a voidable contract is not the same as a void contract. A void contract is considered invalid from the outset and has no legal effect, while a voidable contract is considered valid until it is rescinded.
A voidable contract may be rescinded or set aside for a variety of reasons, including:
- Misrepresentation: If one party makes a false statement or conceals material information, and the other party relies on that information in entering into the contract, the contract may be voidable.
- Duress: If one party is forced or threatened into entering into a contract, the contract may be voidable.
- Undue influence: If one party takes advantage of a position of power or trust to influence the other party to enter into a contract, the contract may be voidable.
- Mistake: If one or both parties make a mistake in entering into the contract, such as a mistake about the subject matter or terms of the contract, the contract may be voidable.
- Incapacity: If one party lacks the legal capacity to enter into a contract, such as a minor or a person of unsound mind, the contract may be voidable.
Essentials of a Valid Contract
- Offer and Acceptance: An offer is a proposal made by one party to another, indicating a willingness to enter into a contract on certain terms. The offer must be clear and unambiguous. The acceptance must be unconditional and in accordance with the terms of the offer.
- Intention to create legal relations: Both parties must have an intention to create legal relations. This means that they intend to be bound by the terms of the contract and are willing to enforce those terms through legal action if necessary.
- Consideration: Consideration is something of value that is exchanged between the parties. It can be in the form of money, goods, services, or a promise to do something or refrain from doing something. Consideration must be sufficient but need not be adequate.
- Capacity to contract: Both parties must have the legal capacity to enter into a contract. This means that they must not be minors, of unsound mind, or under duress.
- Free Consent: Consent must be free, genuine, and not obtained through fraud, undue influence, coercion, or misrepresentation.
- Lawful object: The object of the contract must be lawful. If the object of the contract is illegal, immoral or opposed to public policy, the contract is not valid.
