Definition and Feature of void and voidable contract / Difference between void and voidable contract LLB Notes

 Difference between voidable and void contract with example.

Introduction

 Law of contract 1872 provides the rules for commercial transactions. It is very important branch of mercantile law. A contract is a legal arrangement between two or more parties that is enforceable at law. Contract law legally binds the parties to do or not to do some particular thing between the tenure of agreement. The major elements of a contract are offer, acceptance, and it’s aim is to create legal relations, and consideration. The contract act 1872 is prevail into the whole Pakistan and it does not goes against any other law of the country.

Definition of Void contract

 An agreement which is not enforceable by law is called void contract.

Explanation

 The word void means “not binding in law” A contract which cannot be enforced by law even  no party can take legal action against one another.

Reasons of void contract

Following are the main reasons when contract becomes void.

•  When contract is illegal from the moment it is made
•  Contract was legal but declared unacceptable by the courts because it violates fundamental principles 
•  It becomes void due to the changes in law  Even it has been fully performed .

Feature of void contract

Following are the feature of void contract

1. Enforceability by law

 A void contract is not enforceable by law because it not fulfill the requirements of a valid
contract

2. Compensation

 In void contract no compensation can be paid by any party because it not fulfill the
requirements of a valid contract

3. Nature of contract

 According to its nature because it is against the public policy that’s why it is a void contract
because

4. No legal rights

 A void contract does not create any legal rights because it not fulfill the requirements of a
valid contract

5. No obligation on any party

 A void contract does not create any obligation on any party because it not fulfill the
requirements of a valid contract

 Example of void contract

An agreement which is based upon illegal act is an example of a void agreement.
For example, a contract between drug dealers and buyers is a void contract because the
terms of the contract are illegal. In such a case, no party can go to court to enforce
the contract .

Definition of Voidable contract

 An agreement which is enforceable only with the option of one party who can cancel or
repeal the contract

 Reasons of voidable contract

Following are the main reasons when contract becomes voidable
1) Mistake in facts makes the contract voidable

2) Getting consent by undue influence makes the contract voidable

3) Making contract by minor makes the contract voidable

4) Misrepresentation and fraud, makes the contract voidable

5) Failure of performance within specified time makes the contract voidable

Features of voidable contract

1. Enforceability by law

It is only enforceable by law on the option of one or more parties

2. Compensation 

In voidable contract compensation will be paid by one party to another party if any party
cancels the contract

3. Nature of contract

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

4. Legal Right 

It provides legal rights in hands of both parties who can claim that their consent has been
obtained by undue influence etc.

5. Voidable at the option of one party

The contract is voidable at the option of one party whose consent become cause of void of
the contract

 Examples of voidable contract

Following are the examples of voidable contract

1) Agreement with a person of unsound minded

2) Agreement under undue influence

3) Agreement based upon fraud or misrepresentation

4) Agreement with the minor , are the examples of voidable contract.

 Difference between void and voidable contract

1. As to enforceability

• A void contract is not enforceable
• A voidable contract is enforceable at the option of one party

2. As to compensation

•  In void contract compensation cannot be paid
•  Compensation may be paid in voidable contract

3. Legal effect

•  A void contract has no legal effect
•  A voidable contract has legal effect until it is avoided 

4. As to objection

• In void contract no party can claim his objection against other party
• In voidable contract each party can claim his objection against other party 

5. Time factor

• A void contract is invalid from the moment it is created
• A voidable contract is valid till the time it is avoided

Conclusion ;-

Contract is legally binding agreement between two or more parties by which rights can be
acquired by parties. A void contract is not enforceable by the law due to failure of fulfillments required by law, makes the such contract void. A voidable contract is enforceable by the law but only the option of the one or more parties.