What is the difference between void and voidable contracts?

An agreement between two parties, results into a contract only when all the essential elements of a valid contract are present. In case, one or more such elements are missing, the contract will either be void, or voidable, or illegal, or unenforceable.

 

What is a void contract?

A binding contract is drafted, keeping in mind the legal nitty gritty of law. In case of any oversight, such a contract will have no enforceability. This is where the terms void and voidable contracts come into picture.

In the eyes of law, a void contract is no contract — a nullity from the beginning. So, it can be assumed as if the contract was never formed.

As a result of this, such a contract has zero enforceability. Due to this, neither party involved in the contract can either make the other person abide by the terms and conditions mentioned in the contract, nor sue one another for breach of contract.

A void contract would typically have one of the following elements missing.

Competence of parties: Parties involved in the contract must be eligible to enter a contract. In case they are incompetent, the contract will be void.

Agreement of parties involved: Suppose, the tenant fails to sign the lease deed.

Value of transaction: Suppose in a sale deed, there is no mention of the property prices.

Vogue language: Clarity in language and writing is must for contracts to be legally binding.

Legal inconsistencies: The contract must be made keeping in mind the existing laws. Those not abiding by it will be null and void from the start.

The defect causing a contract void is incurable and has no binding effect. Unless a new and independent contract is re-entered, there will be no contractual relationship between the parties involved.

 

What is a voidable contract?

Unlike a void contract, a voidable contract remains legally binding till it is invalidated through deliberate choice of the party whom the law seeks to safeguard. In such a contract, one of the parties has the legal power to avoid the responsibilities created by the contract.

One of the essential elements of a valid contract, free consent, is missing from a voidable contract.

A contract becomes voidable when a party’s consent is obtained through coercion, undue influence, or misrepresentation. If a party’s consent is influenced by coercion, the contract can be enforced or voided based on the affected party’s choice, as his consent was not freely given.

A party to the contract is bound while the aggrieved party is not. If the unbound party decided to reject the contract, the contract becomes void. Till then, it remains valid and enforceable.

 

What is the difference between a void contract and a voidable contract?

The terms void and voidable have common law origin and are used to show the degree of defect in a contract. The key difference between a void and a voidable contract lies in the fact that the former is illegal and invalid since its creation while the latter is a legal contract that may become invalid if a party opts to cancel or revoke the contract.

 

Difference between void and illegal agreements

Basis	Void contract	Voidable contract
Definition	Not enforceable by law	Enforceable by law at the option of a party
Cause	Become void if it lacks any one of the essentials of a valid contract	Becomes voidable if the consent of one of the parties had not been free
Time	It is void ab initio	Become void only when it is declared to be so by an aggrieved party
Right	Defects of a void agreement are incurable	Defects in the case of a voidable agreement are curable and may be condoned

 

Housing.com Viewpoint

While making the draft of any document related to property transactions or transfer, it is important to ensure that everything complies with the existing law, and nothing contrary to it has even the slightest mention. In case of any loopholes, the document can be challenged in court and can be declared null and void. This also makes it mandatory to hire the services of a legal professional while carrying out property and land related transactions.

 

FAQs

Do void contracts produce any legal effect?

No, void contracts don’t produce any legal effect.

Are void agreements and void contracts the same thing?

Yes, both the terms are referred in context of void contracts.

What defects make a contract voidable?

Defects relating to capacity and consent make a contract voidable.

Is the performance of a void contract impossible?

No, the performance of a void contract is not impossible.

Who holds the right to rescind a voidable contract?

The right to rescind a voidable contract is retained by the unbound party.

Who is competent to contract?

Any person is competent to contract, who is of the age of majority according to the law he is subjected, and who is of sound mind, and not disqualified from contract by any law to which he is subjected.

Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at [email protected]