WHAT IS THE DIFFERENCE BETWEEN A VOID CONTRACT AND ONE THAT IS VOIDABLE?
The Indian Contract Act of 1872 concerns invalid and voidable contracts in Chapter 2. We have five different sorts of contracts based on their validity or enforceability, as listed below: –
- A void contract is one that is no longer legal and cannot be enforced in a court of law, according to Section 2 (j) of the Indian Contract Act, 1872. Such agreements are not legally binding and cannot be enforced by any side.
- A voidable contract is one that is enforceable by law at the option of one or more parties but not at the option of the other,’ says Section 2(i) of the Indian Contract Act 1872. A voidable contract is one that can be avoided by one of the contracting parties at any time.
MEANING OF VALID CONTRACT
Valid Contract’s Definition: A valid contract is one that is legally enforceable and legally binding. It must qualify all contract essentials. All parties are legally bound to perform the contract in a valid contract. Through interpretation and numerous judgments, the Indian Contract Act, 1872 defines and outlines the essentials of a legal contract.
The basic elements required for the agreement to constitute a legally enforceable contract are mutual assent, expressed by a genuine offer and acceptance; adequate consideration; capacity; and legality.
MEANING OF VOID AGREEMENTS
Definition of a Void Agreement: An agreement that is not enforceable by law is said to be void, according to Section 2(g) of the Indian Contract Act, 1872. A minor’s agreement, for example, has been declared void. The Indian Contract Act of 1872, Section 24-30, specifically mentions void agreements. An agreement without consideration, an agreement in restraint of marriage, and an agreement in restraint of trade are examples of these agreements.
A void agreement is described as one that cannot be enforced by law, i.e. one that cannot be challenged in a court of law, according to section 2(g) of the Indian Contract Act, 1872. Because such an agreement has no legal effects, it does not give the parties involved any rights. A void agreement is void from the moment it is made and can never become a contract.
An agreement must follow all of the essentials of a valid contract, as defined in section 10 of the act, in order to be enforceable. As a result, if any one or more fundamentals of a contract are not met throughout its formation, the contract becomes void.
The following agreements are specifically deemed void: –
(i) Agreement with inept parties, such as a juvenile, a madman, or an alien foe.
(ii) An agreement with an illegal consideration or object.
(iii) The contract that prevents a person from marrying.
(iv) An agreement in which both parties are mistaken about a fact that is material to the agreement.
(v) The trade restriction agreement.
(vi) Agreements on wagering, etc.
Void Contract: A void contract is one that cannot be enforced in a court of law. The contract is valid at the time of creation since it fits all of the requirements for a valid contract, including free consent, capacity, consideration, and a lawful object, among others. The contract, however, cannot be executed due to a subsequent change in any law or the impossibility of an act beyond the contracting parties’ imagination and control, and thus becomes void. In addition, neither party has the right to sue the other for breach of contract.
A void contract is one that is no longer legal and cannot be enforced in a court of law, according to Section 2 (j) of the Indian Contract Act, 1872. Such agreements are not legally binding and cannot be enforced by any side.
When entered into, void contracts are legal since they meet all of the act’s enforceability requirements and are binding on the parties, but they become invalid later due to the inability to execute.
Voidable Contract: A voidable contract is one that is enforceable by law at the option of one or more parties but not at the option of the other. A voidable contract is one that can be avoided at the discretion of one of the contracting parties. The contract remains legitimate if such a party does not avoid it; nevertheless, if he prefers to avoid it, the contract becomes voidable. Section 2 I of the Indian Contract Act defines several types of contracts. Not all contracts are voidable; in order to discharge an obligation, a legal precedent must exist.
A voidable contract appears to be lawful and enforceable at first glance, but it can be rejected by one party if flaws are discovered. If a party having the authority to reject the contract decides not to reject it despite the fault, the contract remains legal and enforceable.
Committing to a voidable contract usually harms only one of the parties because that person fails to recognize the other’s dishonesty or fraud.
For example, ‘A’ contacted ‘B’ about building a house for him, and ‘A’ specifically requested that the house be painted white, but ‘B’ carelessly painted the house a different colour. As a result, ‘A’ has the choice of declaring the contract void if his condition against ‘B’ is not met, or accepting the house as is and validating the transaction.
An illegal arrangement is one that breaks the law or has a criminal element, is contrary to public policy, or is immoral. These agreements are void from the start, and all agreements that are collateral to the original agreement are void as well. The transaction linked with or ancillary to the main agreement is referred to as a collateral agreement.
Because such arrangements are expressly prohibited by law, entering into an illegal agreement is considered a criminal offense. As a result, the parties are sanctioned under the Indian Penal Code. An agreement whose terms are uncertain, or an agreement to kill someone, are instances of illegal agreements.
DIFFERENCE BETWEEN VOID AND ILLEGAL AGREEMENTS
The Indian Contract Act of 1872 established that there is a fine line between void and illegal agreements. A void agreement is one that is not banned by law, but an unlawful agreement is one that is strictly prohibited by law and can result in penalties for the persons involved.
(i) A void agreement has a broader reach than an illegal agreement. ‘All void agreements are illegal, but not all void agreements are illegal.’ An agreement’s goal or consideration may not be illegal, yet it may nonetheless be void.
(ii) In terms of collateral transactions, an illegal agreement has a broader effect than a void agreement. Other agreements that are incidental or collateral to an illegal agreement are similarly tainted with illegality and hence void if the third parties are aware of the illegal or immoral design of the original transaction.
Due to technical faults or natural disasters, unenforceable contracts are declared unenforceable by law. The contract cannot be enforced against either party.
For example, ‘A’ agrees to sell 100 kg of rice to ‘B’ for $10,000. However, massive floods hit the states, destroying all of the rice fields. This contract is now voidable, and neither side can enforce it.
What is the difference between a void contract and one that is voidable?
The following are the main distinctions between a void contract and a voidable contract: –
- A void contract is one that cannot be enforced. A voidable contract is one in which one of the contracting parties does not have free will.
- Section 2 (j) of the Indian Contract Act, 1872 defines a void contract, while Section 2 I defines a voidable contract.
- A void contract was valid at the time of creation, but it becomes invalid later. The voidable contract, on the other hand, remains in effect until the aggrieved party fails to withdraw it within the time limit.
- When it is impossible for the parties to carry out an act, it becomes void and cannot be enforced. When the consent of the parties to the contract is not free, the contract becomes voidable at the discretion of the party whose consent is not free.
- In a void contract, no party can sue for damages if the contract is not fulfilled. The aggrieved party, on the other hand, is entitled to compensation for any losses suffered.
We hope that this article helped you in some way or another! For more such information, follow us on Instagram, Facebook, Twitter, and Youtube, or simply subscribe to our newsletter.
DOWNLOAD OUR FREE LEGAL MAGAZINE – LAW MANTHAN 1ST EDITION
(MARCH – APRIL 2022)