Contracts are an essential part of our daily lives, whether we realize it or not. From signing a lease for a new apartment to agreeing to terms and conditions before using an app or website, contracts govern many aspects of our interactions with others.
A void contract is unenforceable from the beginning and has no legal effect, while a voidable contract is initially valid but can be voided by one or more parties if certain conditions are met.
Void vs. Voidable Contracts
| Void Contract | Voidable Contract |
|---|---|
| A Void Contract is one that is not valid from the beginning and cannot be enforced. | A Voidable Contract is one that is valid but can be canceled or voided by one or both parties. |
| It is invalid from the beginning and cannot be made valid. | It is valid until one party chooses to void it. |
| In a Void Contract, neither party is bound by the terms of the contract. | In a Voidable Contract, only one or both parties have the right to void the contract. |
| Any action based on a void contract is illegal and unenforceable. | If a contract is voided, the parties are released from their obligations and any consideration given must be returned. |
| A Void Contract can be declared void by a court at any time. | A Voidable Contract must be voided within a reasonable time frame or before any party takes action based on the contract. |
| Examples of Void Contracts include those with an illegal purpose or impossible task. | Examples of Voidable Contracts include those with minors, contracts signed under duress, or fraud. |
Definition of Void Contract
A contract is void if it is legally invalid from the beginning. This means that the contract was never valid and cannot be enforced by either party. A contract may be void due to a number of reasons, including:
- If the contract was entered into under duress or coercion
- If one of the parties is not of legal age
- If one of the parties is mentally incompetent
- If the subject matter of the contract is illegal
- If the contract violates public policy
Definition of Voidable Contract
A voidable contract is a contract that can be canceled by one of the parties involved, without breaking the law. The party who has the right to cancel the contract is known as the “canceling party.” The other party is known as the “non-canceling party.”
If a contract is voidable, it means that it can be canceled by either party. However, if only one party wants to cancel the contract, they may have to go to court to prove that there was fraud or that they were not legally able to enter into the contract. If both parties agree to cancel the contract, then they can do so without going to court.
Examples of Void and Voidable Contracts
Some contracts are void, which means they are not valid and cannot be enforced. Other contracts are voidable, which means they can be voided or canceled by one of the parties if certain conditions are not met.
- If a contract is entered into under duress or coercion, it may be voidable.
- If a contract is entered into by someone who is not of legal age, it may be voidable.
- If a contract is entered into by someone who is mentally incapacitated, it may be voidable.
Legal implications of each type of contract
- Void Contract: A void contract is one that is not legally binding. This means that neither party can enforce the contract or seek damages if the other party breaches it. A void contract can be created by mistake, duress, or fraud.
- Voidable Contract: A voidable contract is one that is legally binding, but can be canceled by one or both parties. A voidable contract can be created by mistake, duress, misrepresentation, or fraud. If a party cancels a voidable contract, they may be entitled to damages.
- Unenforceable Contract: An unenforceable contract is one that is technically valid but cannot be enforced in court. This usually happens when there is some sort of problem with the way the contract was written or signed. An unenforceable contract can still be enforced through other means, such as arbitration.
- Invalid Contract: An invalid contract is one that is not legally binding from the beginning. This could happen because of a mistake, duress, misrepresentation, or fraud. An invalid contract can never be enforced in court.
What to do if you encounter a Void or Voidable Contract
If you encounter a contract that is void or voidable, you should consult with an experienced attorney to determine your rights and obligations under the contract.
If the contract is void, you are not bound by its terms and you may be able to recover any money or property that you have already given under the contract.
If the contract is voidable, you may be able to choose whether or not to continue with the contract, but if you do choose to continue with it, you will be bound by its terms.
Key differences between Void and Voidable Contracts
- Validity and Legal Effect:
- Void Contract: A void contract is considered to be invalid from the beginning, and it has no legal effect. It is treated as if it never existed, and the parties involved have no legal obligations or rights under the contract. A void contract lacks essential elements required to create a legally binding agreement, such as illegality or a fundamental mistake.
- Voidable Contract: A voidable contract, on the other hand, is initially valid and enforceable. However, one or more parties involved have the option to either affirm or void the contract due to specific legal grounds. If the party with the power of avoidance chooses to void the contract, it becomes null and void. The party exercising the right to void a voidable contract can do so because of factors such as fraud, misrepresentation, duress, undue influence, or the incapacity of one of the parties involved.
- Consequences of Invalidation:
- Void Contract: As a void contract is considered null and void ab initio (from the beginning), the parties are generally released from any obligations stated in the contract. If any performances or exchanges have taken place, they must be returned or compensated. The parties have no legal recourse or claim against each other based on the void contract.
- Voidable Contract: When a voidable contract is successfully voided by the party with the power of avoidance, it is treated as if it never existed. The contract becomes legally unenforceable, and the parties are released from their obligations. However, if any performances or exchanges have occurred prior to the contract’s voidance, the parties may need to restore or compensate for those performances based on the circumstances of the case.
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Conclusion
Void contracts are considered to be unenforceable from the beginning, while voidable contracts are initially valid but can be voided by one or more parties if certain conditions are met. Void contracts have no legal effect and cannot be enforced by either party, while voidable contracts can be enforced until one party takes action to void the contract.
