LAW OF CONTRACTS

IILM
UNIVE UNDER THE SUPERVISION OF Prof.
Mr. RACHIT SHARMA
RSITY, Submitted by: SNEHA KRITI
KACHHAP
GREAT Roll no :2381031
ER B.A.LLB 1st SEMISTER

NOIDA Email id:

kritisnehakachhap8825326463@gmail.com

“VOID AND VOIDABLE CONTRACT”

INDIAN CONTRACT ACT,1872

INTRODUCTION
 According to section 2() states that “When an agreement is
enforceable at law, it becomes a contract”. Based on validity,
there are several types of contracts, i.e., valid contract, void
contract, illegal contract, etc. Void contract and voidable
contract are quite commonly misconstrued, but they are
different. Void Contract, implies a contract which lacks
enforceability by law, whereas Voidable Contract, alludes to
a contract wherein one party has the right to enforce or
rescind the contract, i.e., the party has to right to put the
contract to end.

Definition of Void Contract

A void contract is a contract which is not enforceable in the
court of law. At the time of formation of the contract, the
contract is valid as it fulfils all the necessary conditions
required to constitute a valid contract, i.e., free consent,
capacity, consideration, a lawful object, etc. But due to a
subsequent change in any law or impossibility of an act,
which are beyond the imagination and control of the parties to
the contract, the contract cannot be performed, and hence, it
becomes void. Further, no party cannot sue the other party for
the non-performance of the contract.
The contract becomes void due to the change in any law or
any government policy for the time being in force in India.
Along with that, the contracts which are opposed to public
policy also ceases its enforceability. Contracts with
incompetent persons are also declared void like minor,
persons of unsound mind, alien enemy or convict, etc.
When a Contract Becomes Void

 The terms and conditions are illegal and do not follow

state-approved public policy.
 One of the parties is mentally unstable.
 Any of the parties have not reached the approved age of
consent.
 Certain terms mentioned in the contract are impossible to
perform.
 The contract puts a restriction on the rights of a party.
Example of a Void Contract
If you hire an individual and get a contract signed by him or
her to perform an illegal act, the agreement can't be legally
enforceable. Since the objective of the contract is illegal, it
would be void right from the beginning.
Cause of void contract

Definition of Voidable Contract

Voidable Contract is the contract which can be enforceable
only at the option of one of the two parties to the contract. In
this type of contract, one party is legally authorized to make a
decision to perform or not to perform his part. The aggrieved
party is independent to choose the action. The right may arise
because the consent of the concerned party is influenced by
coercion, undue influence, fraud or misrepresentation, etc.
The contract becomes valid until the aggrieved party does not
cancel it. Moreover, the party aggrieved party has the right to
claim damages from the other party.
Causes
As per the voidable contract section, certain reasons
contribute to negative consequences. Following are the causes
of enforceable contracts:
1 – Misinterpretation

It is a false claim or statement made by either of the parties.

Its prime purpose is to make the other person enter the
contract through verbal terms. As a result, it misleads the
other party. However, if any party gets misinterpreted, they
must show evidence of how they relied on a false claim before
entering the contract. In addition, they also get the right to
rescind the contract.
#2 – Duress or Undue Influence

Duress is a situation where one-party forces physical or

psychological to agree. Some means to perform duress
include threats to life and property, violence, and similar
things. In contrast, undue influence refers to a person using
power to force another person into a contract. For example, a
sibling might threaten another to sign the property papers or
lose his life. For e.g., contact between teacher and student if
teacher forces student to by his/her car and said if you don’t
then I will not allow you to enter in class and student agree
and make a contract so it will come under undue influence or
duress.
#3 – Minors

According to Indian minority act if any individual below a

certain age (mostly 18) can lead to an unenforceable contract.
It is because a person’s maturity at this age can differ
depending on their nature. Therefore, the other party can
reject the offer if they learn about the minor age. However, in
some voidable contract cases, the parties can ratify the
agreement on reaching maturity.
#4 – Mental Incompetence or unsound mind

Section of Indian contract act 1872 It indicates the

capability of an individual to enter into a contract. In other
words, a person with mental or impaired mental capacity can
turn contract as voidable. However, without proper evidence,
a party cannot declare others mentally incompetent. A person
who is usually unsound mind but occasionally sound mind
can enter into contract when he is sound mind but a person
who is usually sound mind but occasionally unsound mind
cannot enter into a contract when he is unsound mind .
Types

Let us look at the types of voidable contracts that can breach

the terms of a contract:
#1 – Contracts Without Capacity

Contracts without capacity are when either of the parties is not

competent to enter the contract. For example, a minor does
not hold the capacity to enter an agreement, thus making it
voidable. However, they have the right to enter the contract
after reaching maturity. Even a mentally incompetent person
signing a contract can turn it voidable without a legal
guardian. Some other examples include drunkards and
wagers.
#2 – Contracts Without Mutual Consent

Contracts that attract no mutual consent of the parties are

voidable. Without proper consent, a high chance of contracts
turning voidable. Remedies for voidable contracts mentioned
above can save them from fraud. As per the judiciary, parties
entering without assent indicate no desire to participate. For
example, voidable contract real estate often sees such
incidents where the party’s consent is illegal.
#3 – Initially Voidable

A contract like this could only exist if one party got forced,
threatened, or deceived into signing it. Such contracts
automatically turn voidable, and so does the approval of the
forced party. Although there was compulsion on the part of
the party, they could choose to continue with the contract.
However, there is an exception to it. The contract would be
valid if the consent were not through coercion, fraud, or
misinterpretation. Also, if the party has all means to know the
facts, considering consent was silent, the contract would not
be void in that case.
Examples

Let us look at the examples of voidable contract cases to

comprehend the concept better:
Example #1

Suppose Christel wants to take a property on the Southwest

side of New Jersey. She approaches Harry as he wants to sell
it. They make the deal and enter into a voidable contract for
real estate. Before agreeing to the contract terms, she acquires
details about the property. Once satisfied, the deal occurs.
Through some sources, Christel discovers this property is
under illegal proceeds. She approaches Harry to sort this out,
but he denies the fact. Finally, through constant discussion
with the lawyer, Harry accepts his fault.
Although the contract had turned voidable, Christel had a
choice to either ratify (change) or cancel it. She chose to
cancel the agreement and switch to another land.
Example #2

In April 2022, the president of the United States, Joe Biden,

proposed the MeToo bill. Per this bill, employee’s victims of
sexual harassment can approach the court. It was added as an
important element of the voidable employment contracts.
More than 60 million American workforces added this
element. The contract will become void if the employees’
rights (approaching the court) are violated.

Key Differences Between Void Contract and Voidable

Contract
The major differences between void contract and voidable
contract are as under:
A contract which lacks enforceability is Void Contract.
A contract which lacks the free will of one of the parties
to the contract is known as Voidable Contract.

1. Void Contract is defined in section 2 (j) while Voidable

Contract is defined in Section 2 (i) of the Indian Contract
Act, 1872.
2. A void contract was valid at the time when it is created,
but later on, it becomes invalid. Conversely, the voidable
contract is valid until the aggrieved party does not revoke
it within stipulated time.
3. When it is impossible, for an act to be performed by the
parties, it becomes void, as it ceases its enforceability.
When the consent of the parties to the contract is not
free, the contract becomes voidable at the option of the
party whose consent is not free.
4. In void contract, no party can claim any damages for the
non-performance of the contract. On the other hand, the
aggrieved party can claim damages for any loss
sustained.
CONCLUSIN