Difference between voidable and void contract
1) Introduction
Law of contract 1872 provides the rules for commercial transactions. It is a very important branch of mercantile law. A contract is a legal arrangement between two or more parties that is enforceable by 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 its 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
2) 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.
3) Reasons of void contract
Following are the main reasons when a 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
4) 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 fulfil the requirements of a valid contract
2. Compensation
In void contract no compensation can be paid by any party because it not fulfil 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
4. No legal rights
A void contract does not create any legal rights because it not fulfil 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 fulfil the requirements of a valid contract
5) Example of void contract
An agreement which is based upon an 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
6) Definition of Voidable contract
An agreement which is enforceable only with the option of one party who can cancel or repeal the contract
I. 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
7) 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 the 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
8) 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
9) 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 another 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
10) Conclusion
Contract is a 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, making the such contract void. A voidable contract is enforceable by the law but only the option of the one or more parties
Ikyan Shah (Advocate High Court)
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