VOID, VOIDABLE AND

UNENFORCEABLE
CONTRACT

GLUP 1053

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• Until now we have been looking at how to form a
valid contract and the effect of the ‘ingredients’
or terms of a contract. Under this topic we will be
looking at the factors which may cause a
contract to be vitiated i.e. annulled or cancelled.

• We will be looking at
– Voidable
– Void, and
– Unenforceable

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 TYPES OF CONTRACT
• S.2(h) - Valid contract

• S.2(i) - Voidable contract – agreement

enforceable at one party’s option but not the
other – Can either rescind or affirm.

• S.2(g) - Void contract – agreement not

enforceable by law .

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 S2(g) : VOID
• In English law, the word ‘void’ as in void contract refers to
an agreement that is destitute of any legal effect ab initio.
• No rights or obligations are created at all.
• Void contract :
– Illegal
– Unlawful

• The provisions of the CA 1950 (s21,24 and 25) merge all

the common law categories of contract that are void –
including those are unlawful

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• Void contacts – Are those contracts which lack any
legal effect (ab initio) no rights or obligations are
created at all. In Malaysian law illegal contracts are
also void. Illegal contracts we will look at later
include contracts which are forbidden by law. For
example a contract for gambling for money in public.

• This means a void contract does not create any legal

rights and cannot be enforced.

Example: At a pub A plays poker with his group of

friends. B wagers with A that he will give A RM1
million if he wins the card game. B does not pay A
when he wins. A cannot enforce the contract
because gambling for money is illegal.

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 S2(i): VOIDABLE
• Refers to an agreement which gives one or more parties but not the
other the choice of affirming or rejecting it.

• The agreement is valid until and unless the party entitled to avoid it opt
to reject it.

• S19(1)-
S19(1) declares the voidability of agreements without free consent
– When consent to an agreement is caused by coercion, fraud or
misrepresentation, the agreement is a contract voidable at the
option of the party whose consent was so caused.

• S20 – consent to an agreement is caused by undue influence, the

agreement is a contract voidable at the option of the party whose
consent was so caused.

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• Voidable contracts means contracts which due
to certain circumstances gives one or more
parties but not the other the choice of either
affirming or rejecting the contract s. 2(I)
Contracts Act.

• The contract is valid and binding until the party

entitled to avoid it opts to do so.

• Example: A coerces B into signing documents of

land to A. The agreement is voidable. B can
either affirm the contract and let A keep the land
or B can reject the contract. A has no right to do
anything.
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 UNENFORCEABLE
• English law:
– Where a contract in substance is valid but cannot
but cannot be enforced by legal action on
account of a failure to comply with certain
mandatory technicalities required by laws.
– Eg : in Hire Purchase.
– CA 1950 often used the
• ‘enforceable by law’ – s2(h) and
• ‘not enforceable by law’ – which is
unenforceable – s2(g)
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 FREE CONSENT
• Is a the basis of a contractual relationship.

• Meeting of the minds – a consensus ad idem

• S.10(1) - Essential element of a valid contract.

‘agreements are contracts if they are made b
the free consent of parties competent to a
contract…’

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 What constitutes consent?

• S.13 - Consent - parties agree upon the same

thing in the same sense – Consent must be free.

• S14 - If consent is caused by coercion, undue

influence, fraud, misrepresentation or mistake –
there is no free consent.
– If proven impair the validity of an agreement
because consent to it is not free.
– The agreement is either void as in the case of
operative mistake or voidable as in all the
others
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 CONSENT IS SAID
TO BE FREE
WHEN IT IS
NOT CAUSED
BY (S14)

UNDUE MISREPRESEN-
COERCION FRAUD
INFLUENCE TATION
S15 S17
S16 S18

MISTAKE
S21,22,23
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• Free consent is required for valid contracts. Section
10(1) provides that all ‘agreements are contracts if
they are made by the free consent of parties
competent to contract…’

When does consent occurs?

• Section 14 provides that ‘Consent is said to be free when
it is not caused by –

• (a) Coercion, as defined in s.15;

• (b) Undue influence as defined in s.16;
• (c) Fraud as defined in s.17;
• (d) Misrepresentation as defined in s.18; or
• (e) Mistake subject to ss.21, 22 and 23.

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• Consent is said to be caused when it would not have been
given but for the existence of such coercion, undue influence,
fraud, misrepresentation or mistake.’

• What happens when fraud, coercion, undue influence,

misrepresentation or mistake is found?

Section 19(1) states that when:

• ‘consent to an agreement is caused by coercion, fraud or
misrepresentation, the agreement is a contract voidable at
the option of the party whose consent was so caused’.

Section 20 states that when:

• ‘Consent to an agreement is caused by undue influence, the
agreement is a contract voidable at the option of the party
whose consent was so caused’.
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• As set out on Section 19(1) and Section 20 of Contracts
Act, agreements entered due to the vitiating factors such as
coercion, fraud, misrepresentation and undue influence are
voidable.
•  
• For fraud and misrepresentation, the option is specifically
provided in section 19(2).
• Therefore under the Contracts Act fraud, coercion, undue
influence and misrepresentation will cause an agreement
voidable at the option of the party whose consent was so
caused.

• Only in the case of operative mistake is a contract void

s.21.
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 SUMMARY
• Sometimes absence of certain elements render
a contract voidable or void.

• Important to determine the effect since the rights

and remedies may differ.

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