Recent time contract law has extremely wide application in practice from consumer transactions to commercial sale of goods and supply of service and even it is widely used in distribution, franchising, licensing. The contact is used when there is good understanding of the principles of contract law is needed. But contract law has a problem too. Many modern business transactions are difficult to reconcile with some well established principles of contract law.
A contract can be defined as legally binding agreement. The agreement will create rights and responsibilities that are enforced by the country’s legal system.
Discharge of contract means termination of contractual relationships between the parties. A contract is said to be terminated when it finish to operate the rights and obligations that is stated in the contract law.
A contract can be used only when there is legal acts are performed. An agreement to carry out an illegal act can result in void contract. For example, the contract between a drug dealers and buyers is void contract simply because the terms of the contract are illegal. A contract can also be void due to impossibility of the performance. If a contract is formed between the parties and the objective of the contract is impossible to achieve then the contract can be void.
Essentials elements of the contract:
A valid contract should have essentials elements when all the requirements are fulfilled. The absence of an essential element should result the contract to be void. The essential elements of a contract are:
- Agreement: An agreement is formed when one party accepts the offer of another party.
- Consideration: Consideration involves that each side must promise to give or do something for the other party.
- Intention to create legal relations: Both parties must have intended their agreement must have legal consequences.
- Capacity: The parties must be legally capable of entering into a contract.
- Consent: The agreement between the two parties must have been entered freely.
- Legality: The purpose of the agreement must not be illegal.
- Lawful object: The object of the contract must be lawful.
- Possibility of performance: The terms of the agreement should be capable of performance.
Void means not binding by law. Void contract means a contract which can’t be enforced by both parties. Void contract is not recognized by law and a void contract does not have any legal rights. A contract become void when the reason of some event occur and could not prevent the performance and the some difficulty must happen after the formation of the contract.
For an example, A and B contract marry each other. Before the time fixed for the marriage, A goes mad. Then the contract becomes void.
Features of void contract
There are some features for a particular contract to be void.
- The contract becomes void when it is not implemented at law.
- The contract creates no legal rights.
- The contract has no obligations for any party.
- The contract offers no compensation to any party.
- Parties are responsible for the performance of the contract.
Contracts which are Declared Void
The contracts which are specifically declared void are as follows
- Contract in restraint of Marriage: A contract declared void when an adult person is prevented from marriage.
- Contract in restraint of Trade: Any kind of unlawful profession, trade and business or any kind to that is considered the contract void.
- Contract where both parties are at Mistake: A contract should be considered as void if the both are at mistakes.
- Contract by way of Wager: Wager means a bet. A wager may be defined as an agreement to pay money on happening of a specified uncertain event.
- Uncertainty: A contract can be void if the meaning of the contract is unclear.
- Immoral: if the contract is against the moral value of the society then it is considered as void.
- Unlawful object: A contract can be void if there is any unlawful is included.
- Fraudulent case: Fraud will make the contract void.
- Injury to others: Any contract which has any injury to a property or a person is considered as void.
- Impossible act: Any contract that is impossible to act is considered void.
- Contracts oppose to public policy: Any contract oppose to public policy is void.
- Contract forbidden by law: If the contract or agreement is forbidden by law then it is considered as void.
- Agreement in restraint of legal proceedings: Every citizen is allowed to have the right to preserve legal proceedings. So the following agreement is void-
- I. An agreement by which a party is restricted absolutely from taking usual legal proceedings, in respect of any rights arising from a contract.
- II. An agreement which limit the time within which one may enforce his or her contractual rights.
Void contract is not enforceable by law. A void contract does not have any legal rights and responsibilities. It neither create any rights on any parties nor is it responsible to perform such contracts.
Capacities of parties:
In general, every person is considered to be competent by law and any person who is different from the ground must prove incapacity of contract. In capacity of contract may arise out of-
- Mental deficiency.
- Status, minor lunatic, idiot and drunken person fall under. Under this circumstances, a person who is intoxicated (voluntary or involuntary) or mentally incompetent must not enter into a contractual agreement.
- Foreign sovereign, ambassador, alien enemies, professional people, corporation and married women fall under.
- Infant under jurisdiction 18 or 21 according to certain regulations by law enforcement.
So from the discussion capacities of contract should be kept in mind. A minor contract is always void and the majority should always get the benefit. A minor may disaffirm contract at any time during minority or at a reasonable time after minor comes an age. As a general rule, parents are not responsible for the minor people to enter into a contract unless one or more parents co-sign the contract. An exception is always there for a minor to go for contract. If a minor engage in a business as an adult, there should be an exception.
In almost all states unmarried person under eighteen years of age are not permitted to enter any contract. An adult can enter into a contract but a person who is underage can’t enter into a contract.
Contract contrary to Public Policy:
The contract which is against the public policy is void. Public policy means the contract which is in between the private parties. Contract which restraint the private companies to do harm to any kind of business or person is void. Contracts that contains terms that are unfairly burden for some company are considered as void contract. Contracts which interfere with public services are considered as void. Contract which delay or obstruct legal process are considered as void.
Effects of Illegality:
Any contract which is contrary to public policy or any other statute then the contract is considered as void. In most of the cases if a contract is void then both parties at the contract is considered equally at fault therefore no party can enforce the other party about the contractual right.
- Justifiable Ignorance: When one of the parties in an illegal contract has no knowledge or do not have any idea that the contract is illegal then the contract is considered as void.
- Protected Classes: When a contract protects a class, a member of that class can enforce other parties to make the contract void and illegal.
- Withdrawal from an Illegal Agreement: If a party withdrawal from a contract because of illegal agreement then the contract is considered as void.
- Fraud or Undue Influence: If any party enters into a contract because of fraud or undue influence then the contractor can influence the contract to be void.
- Duress: If the contract is not genuine or the other parties is forced into the contract then the parties who signs the contract under duress can choose to carry out the contract or cancel the entire transactions.
- Fraudulent Misrepresentation: When an innocent party enters into a contract with fraudulent terms the contract can easily be void because he or she does not voluntarily enters into the contract.
Provisions that are Unlawful
Any provision of contract is unlawful such as contrary to express any provisional law. Contrary to express moral law and contrary to the policy of express law is considered unlawful.
Contracts against the Policy of the law
All the contracts that have their objective directly or indirectly, willful injury to any persons are against the policy of the law.
Penalties and Penal clauses void
If anyone of the contract under performs then the contract is void.
Fixing damages for breach
If any contract is breach the amount of damages to be paid or compensation to be made therefore the contract is void. If the actual damage is really difficult to pay then the parties can negotiate for the implied damage to be paid.
Settlements of damages for personal Injury:
Any settlements or adjustments of any kind of personal injury can result the contract in void. The contract is made if the person is injured or the person is so injured is under disability then the effect can receive within thirty days or six months after the day of injury. Any person sustaining personal injury or the person happens to be dead then the person may elect a representative.
Discharge of contract
When a contract is discharged there is legally binding termination of such duty by a voluntary Act of the parties. The ways the contract is discharged is among the ways of impossibility or impracticability to perform certain due to many reasons such as illness or death of the contractor, impossibility caused by the parties.
Accord and Satisfaction is the most significant methods of voluntary discharge of the contract. “An accord is an agreement to accept some performance other than that which was previously owed under a prior contract” and “Satisfaction is the performance of the terms of that accord. For a contract to be discharged both elements must occur.
The parties can easily discharge the agreement by voluntary. Cancellation, intentional destruction or surrender of a contract can result as a discharge of the duty. When any contract is extinguished it is absorbed by another contract.
Breach of contract: Remedies
The basic remedies available for the breach of contract are damages, reformation and specific performance.
The most common term for the breach of contract is to award money damages. For the breach of contract a sum of money awarded as compensation for injury caused. The goal of damages is to give the non-breaching party the benefit of the bargain.
Failure of Perform
The injured party should be place in a position that he or she should have occupied if the contract had been performed and they are entitled to receive the benefit. The injured party should be in better position if the contract had been occupied.
Defective performance of a contractual agreement is measured by calculating the difference in value between what is actually tendered and what is required as performance under the agreement. If there is any defective of the performance then the purpose of the contract is void.
The delay of performance is calculated by fixing the rental or use of the property or interest as a result of loss incurred through increase material and labor expenses.
If the contract is breached a promised performance damages would be inadequate to compensate. For example, a contract to sell land is specifically enforceable because land is considered unique and not compensate by money.
A contract is an important term for the parties who are engaging in business together. It is duty for both parties to look after that they do not do any kind of activities that are forced to be the contract as void.
- Article base. n.d. Intellectual property rights. Available at http://www.articlesbase.com/intellectual-property-articles/void-contract-3532824.html [Accessed 12 november,2011]
- Introduction to the law of contract. n.d. website: http://www.lawteacher.net/contract-law/introduction.php
- Mercantile Law. n.d. Discharge of contract [pdf]. Available at: http://188.8.131.52/16817Discharge.pdf [Accessed 12 november,2011]
- Void contract. n.d. Available at http://www.reportbd.com/articles/42/1/Void-Contract/Page1.html [Accessed 12 november,2011]
align=”left” size=”1″ />
Introduction to the law of contract. n.d. website: http://www.lawteacher.net/contract-law/introduction.php
Mercantile Law. n.d. Discharge of contract [pdf]. Available at: http://184.108.40.206/16817Discharge.pdf [Accessed 12 november,2011]
Void contract. n.d. Available at http://www.reportbd.com/articles/42/1/Void-Contract/Page1.html [Accessed 12 november,2011]
Article base. n.d. Intellectual property rights. Available at http://www.articlesbase.com/intellectual-property-articles/void-contract-3532824.html [Accessed 12 november,2011]
 Article base. n.d. Intellectual property rights. Available at http://www.articlesbase.com/intellectual-property-articles/void-contract-3532824.html [Accessed 12 november,2011]
 Void contract. n.d. Available at http://www.reportbd.com/articles/42/1/Void-Contract/Page1.html [Accessed 12 november,2011]