Contracts are agreements between two or more parties that can be legally enforced in a court of law. However, not all contracts are the same. Some contracts are considered void, some are voidable, and some are illegal. Understanding the differences between these types of contracts is crucial for anyone involved in the world of contracts.
A void contract is a contract that is not enforceable by law. A contract may be deemed void if it is illegal, or if it lacks the necessary legal elements, such as an offer and acceptance, legal capacity, consideration, and a lawful purpose. In simpler terms, a void contract is equivalent to no contract at all.
For example, a contract between two parties to commit a crime or engage in fraudulent activity is a void contract. Similarly, a contract in which one party is under duress, coercion, or undue influence is a void contract. In such cases, the court will not enforce the contract, and neither party is obligated to fulfill its terms.
A voidable contract, on the other hand, is a contract in which one or both parties have the option to void the contract. This means that the contract is valid and binding at the time of creation, but one or both parties have the right to cancel or void it later on due to certain circumstances.
For example, a contract between two parties where one party was not legally competent to enter into a contract is voidable. The party who lacked the legal capacity has the option to void the contract. Similarly, a contract entered into under misrepresentation or fraud may also be voidable.
An illegal contract is one that involves illegal activities or is contrary to public policy. An illegal contract is void ab initio, meaning it is void from the beginning. The court will not enforce an illegal contract, and any party can refuse to comply with its terms.
For example, a contract to sell illegal drugs or commit a crime is an illegal contract. Similarly, a contract that restricts a person`s right to work or stifles competition is illegal.
In conclusion, contracts can be void, voidable, or illegal. A void contract is equivalent to no contract at all and is not enforceable by law. A voidable contract is valid and binding at the time of creation but can be cancelled or voided later on. An illegal contract is void ab initio and is not enforceable by law. It is important to understand the differences between these types of contracts to ensure that contracts are legally binding and enforceable.