The only similarity between a void and voidable contract is that both are different types of contracts under the Contract Act. If both parties act under a joint misunderstanding of fact, the contract may be voidable. It’s important to remember that all persons engaged in the error must share it for this to apply. A simple misinterpretation of the contract’s terms does not constitute an error of fact. When such faults are made by both parties, the contract is voidable, opening the door to possible annulment.
The right may arise because the consent of the concerned party is influenced by coercion, undue influence, fraud or misrepresentation, etc. Before entering into a contract, the parties must be aware of the types of contract, which may be helpful in understanding their rights and duties. So, take a read of this article, in which we have provided the fundamental differences between void contract and voidable contract. A void contract is known to be such a contract that is not enforceable within the court as per law.
If a party with the power to reject the contract chooses not to reject the contract despite the defect, the contract remains valid and enforceable. A contract can be nullified if it contains terms that are considered illegal or unreasonable in a certain jurisdiction. In addition, courts may also invalidate a contract if it is found that either party was incapable of entering a legal contract at the time it was signed. For example, most legal contracts are not enforceable if the signatory has not reached the age of adulthood. If both parties of a contract agree to waive all factors that can make this contract voidable, such as duress or misrepresentation, then it remains a valid contract. In some cases, laws can render a previously enforceable contract invalid.
The simplest way for a contract to be voided is for both parties to agree that it’s the best option moving forward. They may choose to dissolve the relationship outlined in the contract entirely, or they may choose to correct the contract. Use customizable templates and legally binding eSignatures within one system. These questions will give you legal recourse to cancel or void a contract.
Key Differences Between Void Contract and Voidable Contract
This mainly suggests that the information in the contract was not accurate or that one of the parties did not respect the agreement properly. Any voidable contract is considered valid and legal until cancelled or revoked. A void contract is a legally non-existent agreement, rendering it legally unenforceable from the moment of its creation. This distinct legal status arises due to specific characteristics that fundamentally violate the essential elements of a valid contract.
- Both these terms are interchangeably used in contracts, but not knowing the difference between the two can lead to serious legal consequences.
- Understanding the differences can help protect one’s legal rights in contractual agreements.
- A local lawyer will know just what is needed to get the result you desire.
- This distinct legal status arises due to specific characteristics that fundamentally violate the essential elements of a valid contract.
- Any voidable contract is considered valid and legal until cancelled or revoked.
- Voidable contracts are typically declared void at the request of one of the parties, sometimes owing to force, undue influence, fraud, misrepresentation, or incompetence.
Key Takeaways
Most often, only one of the parties is adversely affected by agreeing to a voidable contract. This may happen because, for example, that party fails to recognize a misrepresentation or fraud made by the other party. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing. To find out how PandaDoc can create viable and enforceable contracts, book a demo right away.
How Voidable Contracts Work
The law can not enforce any legal obligation to either party especially the disappointed party because they are not entitled to any protective laws as far as contracts are concerned. An example of a void contract would be a contract requiring one party to perform an act that is either impossible or illegal. No damages are available for breach of a void contract because under the law, there was no contract to breach. A contract is considered voidable where one void vs voidable contract of the parties in a contract has the option to enforce or reject the contract where agreement terms are not appropriately represented or respected.
An example of a void contract would be one that requires the parties to participate in illegal activity. Voidable contracts can continue to be valid and enforceable for a certain period until the party with the right to void decides to do so. In contrast, void contracts are considered void from the outset and cannot be made valid under any circumstances. These can include a failure to disclose a material fact by one party or the other; a misrepresentation or mistake in the contract; fraud; terms that are unconscionable; or a breach of contract.
Always seek legal advice before voiding a contract under these provisions. We’ll also explore their key differences and how to handle such contracts. You can void a check by writing “VOID” in large letters on both sides of the check. This makes it effectively impossible for someone else to use the check to make a deposit. Supervising impossibility or frustration refers to circumstances that emerge during contract implementation.
A contract becomes void for several reasons, such as fundamental unlawfulness, impossibility, or being against public policy. An example of this could be a contract between two individuals to engage in illegal gambling activities that are prohibited by law. Since such contracts promote activities against the public interest, they are considered void. His main attraction of the house was the home gym, which Vir had turned his garage into. The contract states that the house needs to be as it is, but Vir turns the home gym back into the garage again.
Key Differences Between Void and Voidable Contracts
You can tell whether a contract is void or voidable by analysing its adherence to policy, the capacity of parties and its legality. Void contracts remain unenforceable from the beginning but in case of voidable contracts, the contract remains legally valid until one of the parties declares it void. Overall, void and voidable contracts can be confusing to understand at times. While void means the contract is null, voidable means any one of the parties can make it void or keep it the same. Understanding the key difference between void and voidable contracts is significant in making legal decisions.
The legal system cannot, and will not, enforce fundamentally illegal agreements. For instance, a contract formed to facilitate drug trafficking, money laundering, or any other criminal activity is void ab initio (from the beginning). A void contract is a contract which is not enforceable in the court of law.
A contract may also be voidable if one party lacked the legal capacity to enter the contract at the time it was signed. The voiding of a voidable contract typically requires a court order and may involve a process of rescission (i.e., the cancellation of the agreement). A voidable contract is initially considered a legal and enforceable document. However, it can be rejected by one party if the contract is discovered to have defects.
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. Generally speaking, whether a contract is void or voidable, the process is the same. It is necessary to file a request with the court to have the contract reviewed. This will help the court determine whether the contract is void or simply voidable and what other remedies could be available.