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Void &amp Voidable Contracts

A void contract is invalid from the beginning due to some legal defect, while a voidable contract is valid until one party chooses to void it. A void contract cannot be enforced in court due to impossibility of performance or a legal prohibition, like a contract with a minor. A voidable contract can be enforced until the aggrieved party exercises their option to void it due to defects like coercion or fraud. The key differences are that a void contract is not binding on either party from the start, while a voidable contract is binding until one party chooses to void it.

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Ankur Dubey
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908 views12 pages

Void &amp Voidable Contracts

A void contract is invalid from the beginning due to some legal defect, while a voidable contract is valid until one party chooses to void it. A void contract cannot be enforced in court due to impossibility of performance or a legal prohibition, like a contract with a minor. A voidable contract can be enforced until the aggrieved party exercises their option to void it due to defects like coercion or fraud. The key differences are that a void contract is not binding on either party from the start, while a voidable contract is binding until one party chooses to void it.

Uploaded by

Ankur Dubey
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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VOID & VOIDABLE

CONTRACTS

PRESENTED BY
Ammar Juzar
Ankur Dubey
What is a Contract


 A legally binding agreement
 that means there must be some kind of
agreement between two parties
 However, not all agreements are contracts
because not all agreements are legally
enforceable
 legally enforceable means that a court will
confirm that an agreement is a contract

Void Contracts

 Void contract: A void contract should be
distinguished from a void agreement. An
agreement not enforceable at law is a void
agreement. Agreement with a minor is void
as the minor is not competent to enter into
a contract. A void agreement never
amounts to a void contract as the former is
void from the beginning.
 A void contract is valid when it is entered into,
but subsequent to its formation, something
happens which makes it unenforceable by
law.

 Example: Ram enters into a contract with
Rahim for purchase of his horse for Rs.
10,000 and pays an advance of Rs. 5,000. It
turns out that the horse has been dead,
before the date of the contract and the fact
is not known to both the parties. The
agreement is void, due to impossibility of
performance. Rahim has to refund the
advance received from Ram. Rahim cannot
retain the benefit of advance. In this case,
no contract ever existed at all.

 Let us discuss another situation. On the date
of entering into the contract, the horse is
alive. But before the scheduled date of
delivery, the horse dies. Here too, the
contract is void, due to impossibility of
performance. The contract is valid as the
horse is alive on the date of formation of the
contract, but, later, with the death of the
horse, the contract has become void.
Voidable Contracts

 Voidable contract: According to Section 2 (i)
of the Indian Contract Act, 1872, an
agreement which is enforceable at the
option of one or more of the parties to the
contract, but not at the option of the other
or others, is a voidable contract. In other
words, “A voidable contract is one which can
be set aside or repudiated or avoided at the
option of the aggrieved party.”
 Until the contract is repudiated or set
aside by the aggrieved party, it
remains a valid contract.

 The presence of the flaw (coercion, undue
influence, fraud and misrepresentation) affects
the validity of the contract. This defect enables
the aggrieved party to take steps to repudiate
the contract.
 The important point is till the steps are taken by
the aggrieved, the contract is binding. The
aggrieved party must exercise the option of
rejecting the contract
 (A) within a reasonable time, and
 (B) before the rights of third parties intervene
 In case, the aggrieved party does not choose to
repudiate, the contract becomes binding and

 X threatens to shoot his father-in-law if he does not
sell his land for Rs. 50,000 to him. X pays an
advance of Rs. 10,000 towards the sale and
obtains receipt for the amount paid. His father-
in-law signs the sale agreement.
 The contract has been executed through coercion.
So, the contract is voidable at the option of
 the father-in-law. The party rescinding the contract
must restore the benefit received by him under
the contract. In case, father-in-law chooses to
avoid the contract, he is free to do so, within a
reasonable time. In case of his repudiation, he
has to refund the amount Rs. 10, 000 to his son-
inlaw. It is not possible to retain the amount and
repudiate the contract.
DIFFERENCES BETWEEN VOID
AND VOIDABLE CONTRACTS

Void Contract Voidable Contract
 It is not enforceable by  It is enforceable by law on
law the option of one or more
 It is not performable of the parties, but not at
the option of the others
by either of the
 The performance of a
parties voidable contract is
 It cannot become a possible
voidable contract  Voidable can become a void
 A void contract is not contract
enforceable by the  It is enforceable at the
court of law option of the aggrieved
party



 Any party has the  Only the aggrieved
right to object on party has the right
a void contract to the objection
 It is void at the very  It is a valid contract
beginning until or unless it is
 The collateral avoided
agreement and  It does not affect the
contract also collateral
becomes void due agreement
to illegal objective
IN SIMPLER WORDS

 There is an important distinction between
"void"and "voidable" contracts. Confusion
sometimes arises from the failure to
understand the difference. A contract is void
when the law declares it to be so absolutely
- there is no contract whatever and no
change in the legal position of the parties it
cannot be ratified. A voidable contract, on
the other hand, binds one party but not the
other; it is valid until it is avoided by the
party entitled to avoid it (refuse to do his
part). Until thus disaffirmed it is binding. It
may be ratified

 THANK YOU

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