Introduction. In the law of contracts, the terms void agreement, void contract and voidable contract have precise meanings and different legal consequences. It is essential for practitioners and students to distinguish them because rights, liabilities and remedies of parties vary depending on which category the transaction falls under.
Definitions (short)
- Void Agreement: An agreement not enforceable by law (Sec.2(g) and Sec.23). It is a nullity from the beginning.
- Void Contract: A contract that is void — often used interchangeably with void agreement; legally it has no effect and cannot be enforced.
- Voidable Contract: A contract which is valid and enforceable on the face of it but is voidable at the option of one of the parties because consent was obtained through coercion, undue influence, fraud, misrepresentation or mistake (Sec.19–22).
Key differences (concise table)
| Aspect | Void Agreement / Void Contract | Voidable Contract |
|---|---|---|
| Meaning | No legal effect from the beginning; unenforceable. | Enforceable until avoided by the aggrieved party. |
| Creation | Invalid at formation (e.g., unlawful object, impossible act). | Validly formed but vitiated by defective consent. |
| Enforceability | Cannot be enforced by courts by any party. | Enforceable by innocent party unless avoided by the aggrieved. |
| Right to rescind | No rescission necessary — nothing to rescind. | Aggrieved party may rescind or affirm the contract. |
| Effect on parties | No contractual rights or obligations arise; may give rise to restitution in quasi-contractual situations. | Parties remain bound until contract is affirmed/avoided; rights and obligations subsist till avoidance. |
| Examples | Agreement to commit a crime; wagering agreements; agreement in restraint of trade (subject to exceptions). | Contract entered under coercion, undue influence, fraud, misrepresentation or where mistake vitiates consent. |
| Remedies | No contractual remedy; sometimes restitution (quantum meruit) under quasi-contract. | Damages, rescission, or affirmation; injured party may seek relief in court. |
Illustrations & Case law (concise)
Void / Void Agreement: An agreement to commit an illegal act is void (e.g., a contract to smuggle goods). Section 23 and public policy play a role. Courts will not enforce such agreements.
Voidable Contract: In R v. Attorney-General (or local common law cases) and Indian precedents, contracts induced by coercion or undue influence are voidable at the option of the aggrieved party. For instance, if a party is forced to sign under threat, they may avoid the contract and claim restitution.
Legal consequences — focused points for exam
- On enforceability: Void agreements are unenforceable from the outset; voidable contracts are enforceable until avoided.
- On third parties: Third parties acquiring rights bona fide under a void agreement generally cannot claim rights; under voidable contracts, if affirmed, the contract binds third parties.
- On restitution: When a void agreement has resulted in benefit transfer, courts may apply principles of restitution or quasi-contract (e.g., quantum meruit) to prevent unjust enrichment.
- On limitation: Time-limits for avoidance and actions may differ — a party should act promptly to avoid affirmation through delay.
Examiner-ready summary (bullet points to write in answer)
- Define each term briefly and state statutory sections.
- State the main legal distinction: enforceability (void: no; voidable: yes unless avoided).
- Give two short illustrations or case references for each.
- Explain consequences on rights, remedies and third parties.
- Conclude with a one-line answer emphasising that a voidable contract is valid until avoided whereas a void agreement is a nullity.
Conclusion: A void agreement or void contract is a nullity and creates no legal obligations, while a voidable contract is valid until rescinded by the aggrieved party; the distinction determines enforceability, remedies and the rights of third parties.