Void and Voidable Contract with Examples

Void and Voidable Contract with Examples

Contracts form the backbone of modern society, and they are essential for any business transaction. They provide a legal framework that outlines the rights and obligations of the parties involved. However, not all contracts are created equal, and certain contracts may be considered void or voidable. In this article, we`ll look at the differences between void and voidable contracts and provide examples of each.

What is a Void Contract?

A void contract is an agreement that is not legally binding from the beginning. It is essentially a non-contract and has no legal effect. A contract can be deemed void if it violates the law or public policy. A void contract cannot be enforced by the law, and no legal remedy can be sought in case of a breach.

Examples of Void Contracts:

1. Illegal Contracts: Any agreement that involves illegal activity is a void contract. For example, two parties cannot enter into a contract to sell illegal drugs.

2. Unconscionable Contracts: A contract that is so unfair and one-sided that it shocks the conscience of the court is a void contract. For instance, a contract that requires a person to give up all their legal rights for a small sum of money.

3. Contracts with Minors: Contracts entered into by minors (under 18 years old) are generally voidable. A minor can choose to either enforce the contract or rescind it.

What is a Voidable Contract?

A voidable contract is an agreement that can be legally binding, but only until one of the parties chooses to void it. One or both parties involved in the contract can choose to void the agreement for various reasons, such as duress, mistake, or fraud. Once the contract is voided, it is no longer binding, and the parties are no longer obligated to fulfill its terms.

Examples of Voidable Contracts:

1. Contracts with Mentally Incapacitated Persons: A contract entered into by a person who is mentally incapacitated is voidable. For example, if a person signs a contract while under the influence of drugs or alcohol, they may later choose to void the contract.

2. Contracts with Duress: A contract that is signed under pressure or threats of violence is voidable. For instance, if a person signs a contract out of fear or coercion, they may later choose to void the contract.

3. Contracts with Mistake: A contract that is based on a mistake (such as a mathematical error) may be voidable. For example, if the sale price of a car is mistakenly listed as $100 instead of $1,000, the buyer may choose to void the contract.

In conclusion, it is essential to understand the differences between void and voidable contracts as they can have significant consequences for any business transaction. If you`re unsure about the legality of a contract, it`s always best to seek legal advice before entering into it.