A contract is a legally binding agreement between two or more parties. However, not all contracts are valid or enforceable. There are two types of contracts that fall under this category: void and voidable contracts.
Void contracts
A void contract is a contract that is not enforceable by law. It means that the contract was never legally binding in the first place. The reasons for a contract to be void can vary, but there are a few common circumstances that result in a void contract:
1. Illegality: If a contract involves illegal activities or is against public policy, it is considered void. For example, a contract to sell illegal drugs is void.
2. Mistake: If both parties are mistaken about the terms of the contract, it may be considered void. For example, if the contract is based on a misunderstanding of the facts, it is void.
3. Lack of capacity: If one of the parties is not legally capable of entering into a contract, the contract may be void. For example, a contract signed by a minor is void.
4. Duress: If one party is forced into signing a contract under duress or coercion, the contract is considered void.
Voidable contracts
A voidable contract, on the other hand, is a contract that can be legally voided or cancelled by one or both parties. Unlike a void contract, a voidable contract is initially enforceable but can be cancelled due to certain reasons. Examples of a voidable contract include:
1. Fraud: If a party enters into a contract based on a misrepresentation of facts, the contract may be voidable.
2. Undue influence: If one of the parties is in a position of power and uses that power to take advantage of the other party, the contract may be voidable.
3. Mutual mistake: If both parties are mistaken about an important aspect of the contract, the contract may be voidable.
4. Lack of capacity: If one of the parties lacked the legal capacity to enter into a contract, the contract may be voidable.
In conclusion, before entering into a contract, it is important to ensure that it is valid and enforceable. Understanding the difference between void and voidable contracts can help you avoid legal complications and ensure the contract is legally binding. It is always recommended to consult a legal professional before signing any contract, especially if you are uncertain about its validity.