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 contract is a formal agreement that is effectively illegitimate and unenforceable from the moment it is created. A void contract differs from a voidable contract because, while a void contract is one that was never legally valid to begin with (and will never be enforceable at any future point in time), voidable contracts may be legally enforceable once underlying contractual defects are corrected. At the same time, void contracts and voidable contracts can be nullified for similar reasons.
Void contracts can occur when one of the involved parties is incapable of fully comprehending the implications of the agreement. For example, a mentally impaired individual or an inebriated person may not be coherent enough to adequately grasp the parameters of the agreement, rendering it void. Furthermore, agreements entered into by minors may be considered void; however, some contracts involving minors that have acquired the consent of a parent or guardian may be enforceable.
Any contract agreement created between two parties for illegal actions is also considered a void contract. For example, a contract between an illegal drug supplier and a drug dealer is unenforceable from the onset due to the illegal nature of the agreed-upon activity.
Examples of void contracts:
Here are some examples of void contracts:
- Sale of drugs
- Prostitution in many jurisdictions
- Any act considered a crime under the law
- Contract signed with a minor
- Contract with objects violating the public order
A contract that is valid but that can be declared invalid at the request of one of the parties because of a defect or illegality in making it. For example, if one party made a fraudulent misrepresentation on which the other party relied in making the contract, the contract will be enforced against the misrepresenting party but the other party may seek relief by electing to void the contract.
A voidable contract is initially considered legal and enforceable but can be rejected by one party if the contract is discovered to have defects. If a party with the power to reject the contract chooses not to reject the contract despite the defect, the contract remains valid and enforceable.
Most often, only one of the parties is adversely affected by agreeing to a voidable contract in which that party fails to recognize the misrepresentation or fraud made by the other party.
Examples of voidable contracts:
Voidable contracts are those that start as valid and then may become voidable.
- A contract signed by misleading the other party
- A contract signed by due to acts of fraud
- Contract signed with someone when they were temporarily incapacitated
Difference Between Void Contract and Voidable Contract:-
When an agreement is enforceable at law, it becomes a contract. Based on validity, there are several types of contract, i.e. valid contract, void contract, illegal contract, etc. Void contract and voiadable contract are quite commonly miscontrued, but they are different. Void Contract, implies a contract which lacks enforceability by law, whereas Voidable Contract, alludes to a contract wherein one party has the right to enforce or rescind the contract, i.e. the party has to right to put the contract to end. The type of contract which cannot be enforceable is known as void contract and The contract in which one of the two parties has the option to enforce or rescind it, is known as voidable contract. In Void contract The contract is valid, but subsequently becomes invalid due to some reasons and in Voidable contract The contract is valid, until the party whose consent is not free, does not revokes it.