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Below is an Explanation That Brings Together Definitions

The document explains the distinctions between void and voidable agreements under the Indian Contract Act, 1872, highlighting that void agreements lack legal enforceability from the outset due to illegal objects or incompetency, while voidable agreements are initially valid but can be rescinded due to defects in consent. It also outlines specific categories of agreements that are expressly declared void by law, such as those restraining trade or involving minors. Overall, the document emphasizes the importance of legal capacity and consent in contract formation.

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3 views4 pages

Below is an Explanation That Brings Together Definitions

The document explains the distinctions between void and voidable agreements under the Indian Contract Act, 1872, highlighting that void agreements lack legal enforceability from the outset due to illegal objects or incompetency, while voidable agreements are initially valid but can be rescinded due to defects in consent. It also outlines specific categories of agreements that are expressly declared void by law, such as those restraining trade or involving minors. Overall, the document emphasizes the importance of legal capacity and consent in contract formation.

Uploaded by

haldergaurav5
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Below is an explanation that brings together definitions, statutory provisions,

and factual examples—most notably under the Indian Contract Act, 1872—to
clarify these concepts.

A. Void vs. Voidable Agreements

1. Void Agreement

A void agreement is one that fails to create legal rights or obligations from
the very beginning. In other words, it is not enforceable by law because it
lacks one or more essential ingredients required for a valid contract.
Statutory provisions ensure that an agreement with an illegal object or
consideration is automatically void.

Provisions & Facts:

 Unlawful Object or Consideration:


Under Section 23 of the Indian Contract Act, 1872, an agreement is
void if its object or consideration is unlawful. This includes agreements
aimed at committing crimes, defrauding others, or violating public
policy.
Example: An agreement between two parties to fix prices for the sale
of illicit drugs is void because its object is illegal. No court will enforce
such an agreement, regardless of the parties’ intentions.

 Incompetency:
According to Section 11 of the Indian Contract Act, only persons
competent to contract (i.e., of sound mind and not minors) can enter a
binding contract. Any agreement involving a minor is void ab initio.
Example: A minor’s contract to purchase goods is void. Even if the
minor receives the goods, the legal system will not compel
performance or payment because the minor lacks the capacity to
contract.

 Performance of an Impossible Act:


When the subject matter of a contract becomes objectively impossible
to perform, the agreement remains void.
Example: A contract to transfer a piece of land that has been legally
declared non-existent is void because the object of the contract is
impossible to fulfill.
Thus, a void agreement is treated as if it never had any legal effect; both
parties are restored to their original positions, and no rights can be enforced
against anyone.

2. Voidable Agreement

A voidable agreement is one that is valid and enforceable on its face but
contains a defect arising from circumstances such as coercion,
misrepresentation, undue influence, or mistake. The aggrieved party in such
an agreement has the right—but not the obligation—to rescind or affirm the
contract.

Provisions & Facts:

 Consent Defects:
Under Section 19 of the Indian Contract Act, free consent is crucial for
forming a valid contract. If consent is obtained by coercion, undue
influence, fraud, or misrepresentation, the contract becomes voidable
at the option of the defrauded or pressured party.
Example: Suppose a seller exaggerates the quality of a used car,
leading the buyer to make an informed decision under
misrepresentation. Although the contract is initially valid, the buyer
can later choose to rescind it because the contract was induced by
misleading representations.

 Effect Over Time:


A voidable contract remains effective until the adversely affected party
actively disaffirms it. If no such step is taken, the contract continues to
bind both parties.
Example: In an employment contract where undue influence was
exerted, the employee may continue to work under the agreement
until they decide to annul it legally.

In summary, while a voidable agreement initially creates enforceable


obligations, its continuation depends on the satisfaction of the consent
requirement. The aggrieved party holds the option to cancel it, which makes
the agreement “voidable” at their discretion.

B. Agreements Expressly Declared Void


Certain agreements are declared void by legislation because they
contravene statutory provisions or are deemed harmful to public policy. Here
are key categories:

1. Agreements in Restraint of Trade


Provision: Section 27 of the Indian Contract Act, 1872
Fact:

o Any agreement that restrains a person from engaging in a lawful


trade, profession, or business is to be held void.

o Example: A non-compete clause that completely bars an


employee from working in an industry, irrespective of
geographical limits or reasonable time, is void because it
restricts an individual’s right to earn a livelihood.

2. Agreements in Restraint of Legal Proceedings


Provision: Although not codified in a single provision, agreements that
prohibit access to the legal system are considered void as they
contravene public policy.
Fact:

o Example: A clause that prevents a party from filing a lawsuit


under any circumstance (even in cases of breach) is void
because it strips away the ability to seek judicial redress.

3. Agreements with Unlawful Object or Consideration


Provisions: Sections 23 and 24 of the Indian Contract Act, 1872
Fact:

o Any agreement whose purpose or consideration is illegal is


automatically void.

o Example: Contracts that involve committing a crime (such as


fraud or illicit trade) or agreements based on gambling (when
such gambling is prohibited) are void.

4. Agreements Involving Minors or Incompetent Persons


Provision: Section 11 of the Indian Contract Act, 1872
Fact:

o Agreements entered into by minors or persons of unsound mind


are void ab initio because these parties lack the necessary legal
capacity.
o Example: A lease agreement signed by a minor is void—not
enforceable under the law.

5. Agreements for the Performance of an Impossible Act


Provision: General principles under the Contract Act and common law
Fact:

o If the performance of the contract is not possible due to a change


in circumstance or inherent impossibility, the agreement is void.

o Example: A contract to perform an act that becomes impossible


(such as selling property that has been destroyed) is deemed
void and unenforceable.

Concluding Thoughts

The differences between void and voidable agreements hinge on


enforceability. Void agreements never create legal obligations because
they contain inherent legal defects from the start—violating statutory
requirements like those in Sections 23 or 27. Voidable agreements, on the
other hand, begin as enforceable contracts but can be rescinded by the
affected party due to issues in consent as provided under Section 19.

Meanwhile, the law expressly declares certain categories of agreements—


those restraining trade or legal proceedings, those involving unlawful objects
or consideration, those with minors, or those predicated on an impossible act
—as void to uphold public policy and ensure fair commerce.

Would you like to examine any landmark cases that illustrate these principles
or discuss further details on how these provisions have evolved in judicial
interpretation?

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