Distinguish between Void and Voidable contracts.

Question: Distinguish between Void and Voidable contracts. [UPJS 1983]

Find the answer to the mains question of the Law of Contract only on Legal Bites. [Distinguish between Void and Voidable contracts.]

Answer

A void contract is a contract which is not enforceable in a court of law. At the time of formation of the contract, the contract is valid as it fulfills all the necessary conditions required to constitute a valid contract, i.e. free consent, capacity, consideration, a lawful object, etc. However due to a subsequent change in any law or impossibility of an act, which is beyond the imagination and control of the parties to the contract, the contract cannot be performed, and hence, it becomes void. Further, no party can sue the other party for the non-performance of the contract.

The contract becomes void due to the change in any law or any government policy for the time being in force in India. Along with that, the contracts which are opposed to public policy also cease their enforceability. Contracts with incompetent persons are also declared void like minors, persons of unsound minds, alien enemies or convicts, etc.

On the other hand, a Voidable Contract is a contract which can be enforceable only at the option of one of the two parties to the contract. In this type of contract, one party is legally authorized to make a decision to perform or not to perform his part. The aggrieved party is independent in choosing the action. The right may arise because the consent of the concerned party is influenced by coercion, undue influence, fraud or misrepresentation, etc.

The contract becomes valid until the aggrieved party does not cancel it. Moreover, the aggrieved party has the right to claim damages from the other party.

Key Differences Between Void Contract and Voidable Contract

The significant differences between a void contract and a voidable contract are as under:

• A contract that lacks enforceability is a Void Contract. A contract that lacks the free will of one of the parties to the contract is known as a Voidable Contract.
• Void Contract is defined in Section 2 (j) while Voidable Contract is defined in Section 2 (i) of the Indian Contract Act, 1872.
• A void contract was valid at the time when it was created, but later on, it becomes invalid. Conversely, the voidable contract is valid until the aggrieved party does not revoke it within the stipulated time.
• When it is impossible, for an act to be performed by the parties, it becomes void, as it ceases its enforceability. When the consent of the parties to the contract is not free, the contract becomes voidable at the option of the party whose consent is not free.
• In a void contract, no party can claim any damages for the non-performance of the contract. On the other hand, the aggrieved party can claim damages for any loss sustained in the voidable contract.