LAW OF CONTRACT
CHAPTER 5: VOID AND
VOIDABLE AGREEMENTS
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.
VOID AND VOIDABLE AGREEMENTS
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.
VOID AND VOIDABLE AGREEMENTS
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 by
agreement alter 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 4. 5.
by way of wages are void.
6. Section 56(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.
VOID AND VOIDABLE AGREEMENTS
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 : 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.”
VOID AND VOIDABLE AGREEMENTS
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 law in force in
India. Example : an agreement to commit murder, robbery or
cheating.
VOID AND VOIDABLE AGREEMENTS
Distinction between a Void Agreement and an 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
transaction.
• If the main agreement is void, (but not illegal) agreements
which are incidental or collateral to it may be valid. (See
examples of Wagering Agreement in ch. 8)
VOID AND VOIDABLE AGREEMENTS
Examples :
(i) P engages B to kill C and borrows Rs. 100 from D to pay B. 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 Rs. 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.
VOID AND VOIDABLE AGREEMENTS
Valid Contract
An agreement which satisfies all the essential elements of a
contract and which is enforceable through the courts is called
valid contract.
-THE END-
