Void and Voidable Agreements

An agreement which does not satisfy the essential elements of a contract may be either void or voidable. The definitions of these terms are given below.

1. Void Agreement

  • “An agreement not enforceable by law is said to be void.­Sec: 2(g).
  • A void agreement has no legal effect. It confers no rights on any person and creates no obligations.

examples of Void Agreement :

An agreement made by a minor; agreements without consideration (except the ‘cases coming under Sec. 25. p.. 42) ; certain, agreements against public policy ; etc. [A list of such agreements’ is given in ch. 8]these agreements are void ab ‘initio, i.e.., void from the beginning

Agreements which become void : An agreement, which was legal’ and enforceable when it was` entered.. into, may subsequently become-void due to impossibility of performance, change of law or other reasons. When it becomes. void the agreement ceases to have Legal effect. [The’ rights and obligations of the parties in such cases are discussed in ch.11 ]

There are certain agreements which are expressly declared to be void even though they may otherwise satisfy Sec.10 of the ,Indian contract Act. (i.e. would ‘have ‘been otherwise enforceable contracts). ,They, are ..as follows ,

  1. Section 26 of the Contract Act provides that every agree­ment in restraint of the. marriage of any. person, other than a; minor is void.
  2. Section 27 of the Act states that every agreement -by which anyone- is restrained’ from exercising a ‘lawful profession, trade or business’ of any ‘kind, is to that extent void.
  3. According to Section ’28 ‘of the Act Private individuals cannot y agreement g1ter or vary their personal law or the’ Statute law.
  4. section 29 implies that, agreements, the meaning ,of which is not certain, or capable of ,being made certain are void.
  5. Section; 30 of the Contract Act clearly states that. agreements by way of wages are void.
  6. Section S6(1) provides that agreements to do an act Impos­sible in itself are void.
  7. section 24, 57 and 58 -maintain that agreements whose objects or considerations are unlawful are void.

2. Voidable Agreement

  • A voidable agreement is one which can be avoided, i.e., set aside by some of the parties to it.
  • Until it is avoided, it is a good contract. “An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or .others, is a voidable contract.”-Sec. 2(i)

Examples of voidable contracts : .

  • A Contracts brought about by coercion, undue influence, misrepresentation etc.
  • X coerces Y into entering into a contract for the sale of Y’s house to .X This contract can be avoided by Y. X cannot enforce the contract. But Y, if he so desires, can enforce it against X.

Unenforceable Agreement .

The term Unenforceable Agreement is used in English law. It means an agreement which cannot be enforced in a court of law, one or both of the parties, because of some technical defect, e.g., want of registration or non-payment of the requisite stamp duty.

Illegal Agreement

An” Illegal Agreement is one ‘which is against a la* m force in India.

Example : an agreement to commit murder, robbery or cheating

Distinction between it Void Agreement and aim Illegal Agreement

  • An illegal agreement is also void. But a void agreement is not necessarily illegal. An agreement may not be contrary, to law but may still be void. An: agreement, the terms of which are uncertain, is void but such a contract is not illegal.
  • When an agreement is illegal, other agreements which are incidental or collateral to it are void.: The reason, underlying this rule is that the courts will not enforce any agreement entered into with the object of assisting or. promoting an illegal trans-. action.
  • If the main agreement is void, (but not illegal) agreements which are incidental or collateral to it may be valid.

Examples :

(i) p engages B to kill C and borrows Rs. 100 from ‘D to pry 8. Here the’ agreement with B is illegal. The agreement with D is collateral to it, if D is aware ,of the purpose of the loan. In this case the loan transaction is void and D cannot recover the money. But if D is not aware of the purpose of the loan, it may be argued that the loan transaction is not collateral to the other illegal agreement and is valid.

(ii)  W enters into a wagering agreement and borrows Its. 100 for the purpose. The main agreement is void but the loan transaction being merely collateral to it is valid even though the creditor is aware of the purpose of the loan.

Valid Contract

An agreement which satisfies ail the essential elements of a contract, and which is enforceable through the courts is. called, valid contract.