The Indian Contract Act classifies agreements into valid, void, voidable, and illegal. The distinction between void and voidable agreements is crucial to determine enforceability in law.
1. Void Agreements [Section 2(g)]
Definition:
An agreement not enforceable by law is void.
Key Characteristics:
- It has no legal effect.
- It creates no rights or obligations.
- It is as good as no contract.
- It is void from the beginning (void ab initio) or becomes void later.
Examples:
- Agreement with a minor (capacity missing)
- Agreement without consideration (unless under exceptions)
- Agreement in restraint of marriage or trade (public policy)
- Agreement with unlawful object or consideration
- Agreement made under mutual mistake of fact
Relevant Case Law:
Mohori Bibee v. Dharmodas Ghose (1903)
Held: An agreement with a minor is void ab initio.
2. Voidable Agreements [Section 2(i)]
Definition:
An agreement that is enforceable by law at the option of one party, but not at the option of the other, is a voidable contract.
Key Characteristics:
- It is valid and enforceable unless rescinded by the aggrieved party.
- The aggrieved party has the choice to continue or void the contract.
- Usually arises due to defect in free consent.
Grounds for Voidability (Refer to Sections 19 & 19A):
- Coercion (Section 15)
- Undue Influence (Section 16)
- Fraud (Section 17)
- Misrepresentation (Section 18)
If consent is not free, the contract is voidable at the option of the party whose consent was so caused.
Example:
- A signs a contract under threat to his life. He may later choose to avoid the contract.
Relevant Case Law:
Raghunath Prasad v. Sarju Prasad (1924)
Held: A contract entered under undue influence is voidable at the option of the party influenced.
3. Key Differences between Void and Voidable Agreements
| Basis | Void Agreement | Voidable Agreement |
|---|---|---|
| Definition | Not enforceable by law | Enforceable at the option of one party |
| Legal effect | Has no legal effect | Valid until avoided by the aggrieved party |
| Creation of rights | No rights or obligations created | Creates legal rights until rescinded |
| Consent | Often absent (like mistake, illegality) | Consent obtained through coercion, fraud, etc. |
| Time of invalidity | Void from the beginning or becomes void | Valid initially, later becomes voidable |
| Examples | Agreement with minor, unlawful object | Agreement by fraud, coercion, undue influence |
4. Additional Points
- A void agreement is never a contract.
- A voidable agreement is a contract unless rescinded.
- If the aggrieved party does not avoid a voidable contract within a reasonable time, it may become binding.
Latest Legal Internship- View here
Practical Questions
Q1: A minor enters into a contract for purchasing a car. Valid?
Ans: Void. Minor lacks capacity.
Q2: A is forced by B to sell his land. Valid?
Ans: Voidable. A can rescind the contract due to coercion.
Q3: A and B enter into a contract by mistake about the subject matter. Valid?
Ans: Void due to mutual mistake of fact.