Void & Voidable Contracts

1. INTRODUCTION:

A contract is an agreement which is enforceable at law. A contract consists of two elements: (i) An agreement (ii) The agreement should be enforceable at law

2. VOID CONTRACT:

According to sec 2 (g)

An agreement which is not enforceable at law is void contract.

EXPLANATION:

The word void means not binding in law. A contract which can not be enforced by either party is void contract.

3. FEATURES OF VOID CONTRACT:

Following are features of void contract

(I) NOT ENFORCEABLE BY LAW:

A void contract is not enforceable by law.

(II) NO LEGAL RIGHTS:

A void contract creates no legal rights.

(HI) NO OBLIGATION ON ANY PARTY :

It creates no obligation on any party.

(IV) NATURE OF CONTRACT:

An agreement which is against the public policy or against any law is void.

(V) NO COMPENSATION:

NO compensation can be paid to any party.

4. EXAMPLES OF VOID CONTRACT:

(I) An agreement In restraint of marriage, (ii) An agreement to in restraint in trade.

5. VOIDABLE CONTRACT:

According to section 2 (i)

"An agreement which is enforceable by law at the option of one are more of the parties there to but not at the option of the other or others is a voidable Contract.

6. FEATURES OF VOIDABLE CONTRACT:

Following are features of voidable contract.

(I) ENFORCEABLE AT THE OPTION OF ONE PARTY:

It is enforceable at law at the option of one or more parties.

(II) RIGHT OF COMPENSATION:

If the contract is revoked by a person rightfully then he can also receive the compensation.

(III) BURDEN OF PROOF:

The burden of proof lies on the party who claims that his consent has been obtained by coercion. Fraud etc.

VOIDABLE AT THE OPTION OF ONE

PARTY:

The contract is voidable at the option of the party whose consent is caused.

(V) NATURE OF CONTRACT:

A voidable contract is a valid contract until it is avoided by the party having the right to avoid it. Once it is avoided it becomes void.

7. INSTANCES OF VOIDABLE CONTRACT:

(I) Agreement by person of unsound minded.
(Ii) Agreement by undue influence.
(Iii) Agreement by Fraud.
(Iv) Agreement by coercion.
(V) Agreement by misrepresentation.
(Vi) Agreement by minor.

8. DISTINCTION BETWEEN VOID AND VOIDABLE CONTRACT:

(I) AS TO ENFORCEABILITY:

(I) A void contract is not enforceable; (Ii) A voidable contract is enforceable at the option of one or more parties.

(II) AS TO OBJECTION:

(I) Any party can use the right of objection in a void contract.

(Ii) There is no party who can object the contract.

(III) AS TO COMPENSATION:

(I) In void contract compensation can not be paid, (ii) Compensation may be claimed in voidable, contract.

(IV) TIME FACTOR:

(I) A void agreement is void itself in the beginning; (Ii) A voidable contract is valid into that time when it is avoided.

(V) LEGAL EFFECT:

(I) A void contract has no legal effect; (Ii) A voidable contract has legal effect until it is avoided.

(VI) COLLATERAL AGREEMENT:

(I) A collateral agreement to void agreement is a void contract, (ii) A collateral agreement is a voidable contract is not a void contract.

9. CONCLUSION:

To conclude I can say that contract is a legally binding agreement between two or more persons by which rights are acquired by one or more to act or for bear one the part of others. A void contract is not enforceable at law. While voidable a contract is enforceable at the option of one party.

Source by Chaudhry Omar Ejaz

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