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VOID & VOIDABLE CONTRACTS-

A BRIEF DISCUSSION
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WHAT IS A CONTRACT?
Unless otherwise stated, all the section references in
this presentation are with reference to Indian
Contract Act-1872:

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Sec2 (h) An agreement enforceable by law is a contract.
So:
Contract = Agreement + Enforceability in a court of
Law

Now this leads us to another term ‘agreement’.

What is an agreement? 2
WHAT IS AN AGREEMENT?

Sec2 (e) Every promise and every set of

promises, forming the consideration for each

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other, is an agreement:
Promise/(s) Promise/(s)
.->
(in return) Agreement

Now this leads us to another term ‘promise’.

What is a promise?

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WHAT IS A PROMISE?

Sec 2(b) When the person to whom the proposal is

made signifies his assent thereto, the proposal

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is said to be accepted. A proposal, when accepted,
becomes a promise.

Promise = Proposal/Offer + Acceptance

Now this leads us to another term ‘proposal’.

What is a proposal?

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WHAT IS A PROPOSAL?

Sec 2 (a) When one person signifies to another his

willingness to do or to abstain from doing

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anything, with a view to obtaining the assent of
that other to such act or abstinence, he is said to
make a proposal:

So diagrammatically we can understand a contract

as following:

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DIAGRAMMATIC REPRESENTATION:

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Proposal Promise Agreement Contract

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WHAT IS ‘VOID ABINITIO’ ?
The term ‘void abinitio’ means void from the very
beginning.

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So can there be a contract which is void abinitio?

Ans: Even though in learned circles we hear people

talking about “a void abinitio contract” it is a
misnomer!

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THEN, WHAT ARE THEY REFERRING TO?
In such cases the reference is to void agreements
(not contracts).

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Yes an agreement not a contract. For, such
agreements do not reach the fourth step and
hence do not become contracts. This is clearer
when we see the definition of ‘void agreement’.

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WHAT IS A ‘VOID AGREEMENT’?.
Sec 2(g) An agreement not enforceable by law is
said to be void.

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Examples of void agreements:

An agreement made by incompetent parties
(Minor/of unsound mind/Incapacitated Person for
other reason) is void. (Sec-11)

Any agreement with a bilateral mistake- as to
essential fact(s)- is void. (Sec-20)

Agreements which have unlawful consideration
are void. (Sec- 10) (Sec-24) 9
EXAMPLES OF VOID AGREEMENTS
(CONTD.):

An agreement with a unlawful object is void.
(Sec- 10) & (Sec-24)

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Agreements made without consideration is void.
(Sec-25)

Agreement in restraint of marriage of any major
person is void (absolute restriction). (Sec 26)

Agreement in restraint of trade is void.
(Exception :reasonable reason) (Sec 27)

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EXAMPLES OF VOID AGREEMENTS
(CONTD.):

Agreement in restraint of legal proceedings is
void. (Sec 28)

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An agreement the terms of which are uncertain is
void. (Sec 29)

An agreement by way of wager
(betting/gambling) is void. (Sec 30)

An agreement contingent upon the happening of
an impossible event is void. (Sec 36)

Agreement to do an impossible act is void.

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ALL CONTRACTS ARE VALID WHEN MADE.
We also say void and voidable contracts…
What are those?

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As defined earlier, all contracts are valid when
made. Enforceability of contracts would change
when additional factual/ circumstantial features
surface.

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NATURE OF CONTRACTS:

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Enforceability

Valid Voidable Void

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WHAT IS A ‘VOIDABLE CONTRACT’?
Sec 2(i) An agreement which is enforceable by law
at the option of one or more of the parties-

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thereto, but not at the option of the other or
others, is a voidable contract:

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NOW WHAT IS A ‘VOID CONTRACT’?
Sec 2(j) A contract which ceases to be enforceable
by law becomes void when it ceases to be

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enforceable.

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DISTINCTION BETWEEN VOID AND
VOIDABLE CONTRACTS:
Void Voidable

Is valid when made but A ‘voidable contract’ is

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subsequently becomes voidable at the option of
unenforceable on certain the aggrieved party, and
grounds hence remains valid
until such rescission.
Eg: Eg:
Contracts caused by Contracts caused by
mistake are void. coercion, undue
influence, fraud and
misrepresentation are 16
voidable.
 Way forward:

The essential features of a

contract are enlisted in Section-
10.
A general discussion on
contracts will not be complete
without visiting those
provisions.

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