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What is a Void Contract?
A contract that is legally not enforceable from the moment it is formed can be termed as a Void Contract. It can be nullified for some reasons. Contracts become void for a variety of reasons, including illegal consideration. Both voidable contracts and void contracts are different from one another. However, they can be drafted and created if and only if both parties wish to indulge legally.
Causes of Void Contract
Presence of any illegal object or element
A contract is deemed to be void it is consists of any illegal object, consideration or element. For example: If the terms mention illicit substance or promise of sex or anything that is objectionably caused due to either or both the parties. This will simply violate the agreement or contract.
Either or both parties are incompetent
If either one party or both the parties are legally incompetent then the contract or agreement will be considered as a void contract. If the party or both the party do not have the capacity to make informed decisions or are incapable to enter into the agreement then the contract will be null or void.
Elements of a Void Contract
The presence of the following elements in the agreement or contract will lead to a void or null agreement/contract:
Proper inclusion of elements
A contract will be deemed or void if it fails to include complete terms and conditions laid by both parties.
Mutual benefit
It is essential for both parties to benefit post entering into the contract or agreement. If any one party is enjoying the benefit on the cost of another party then the agreement or contract will be termed as null or void.
Ensuring the legality of contract
If both the parties simply make a promise then in that case a contract will not be formed. It is essential for both the parties to indulge legally and establish their terms and conditions in it. Also, both of them should mutually agree. Or else, the contract will be void.
Acceptance
It is essential for both parties to be in an aware state. They should know about all the terms laid in the contract and acknowledge them mutually. It is essential to accept the conditions for both parties. In case, either one party or both do not accept, then this contract will be void.
Void and Voidable Contracts
Both ‘voidable’ contracts and ‘void contracts’ differ from one another. Usually both the words are replaced and used for one another. A voidable contract is a valid document. A void contract is not enforceable under the Court of Law.
Steps for Voiding a Contract
Determine which aspects of the contract may be void: –
- Examine which laws and reasons apply to the contract being void
- Make sure that all contract-related information is assembled (e.g., communication between partakers, signed copies, etc.)
- It is essential for parties to decide whether they have to draft a new contract or whether it should be discarded.
- Legal action may be taken to evaluate the case and resolve whether or not the contract is null or void.
Void Contract Example
Example 1
Reena agrees to a 50/50 split of royalties from her new album with a record label. Reena, on the other hand, has been drinking at the bar for several hours and is severely inebriated at the time of this agreement. Because Reena was incompetent when she signed the contract, it is null and void.
Example 2
Assume you’re in a similar situation to the previous example. This time, Reena is a minor, and she hasn’t had anything to drink. The contract is immediately voidable due to Reena’s small size. However, the agreement is valid because she was not incompetent. Reena will have the option of continuing the contract or terminating it.
Example 3
A contract between a local dealer and a drug supplier for an illegal drug transaction. Because it involves illicit goods, this contract would be null and void. It is unenforceable from the beginning because it serves no legal purpose. Another example is a contract that restricts a few activities, such as the right to work for a living or who a person can marry
Other Considerations
When each arrangement is unique, it can be difficult to determine its validity. While a contract may not be invalid when written, it may become void as a result of other factors. New rules may be enacted that render a contract immediately null and void. Furthermore, previously unknown information to the contracting parties can nullify the warranty.
Difference Between Void Agreement And Void Contract
Although the terms agreement and contract are used interchangeably in common parlance, it is essential to understand their distinction. The terms agreement and contract have different meanings in legal jargon. In a legal sense, an accepted proposal is a promise. The promisor is the individual or party who proposes to do or get something, and the promisee is the person or party who receives the offer. An agreement is a promise supported by a reference from the promisor and the promisee. A contract is an enforceable contract where the parties seek legal backing, and specific rules must be followed.
Conclusion
One should always make sure that the contract is the valid one as according to its nature it can’t be enforced. In case any of the parties tries to breach the contract, then no one can recover anything on the basis that there wasn’t any valid contract formed.
