Understanding the difference between void agreement and void contract is essential as they have a significant impact on legal enforceability. These two terms are often used interchangeably, but they have different meanings. In this article, we will differentiate between void agreement and void contract with the help of illustrations.
A void agreement is an agreement that is not legally enforceable. According to Section 2(g) of the Indian Contract Act, 1872, an agreement becomes void in the following circumstances:
1. Agreement by a person who is not competent to contract: An agreement with a minor, person of unsound mind or disqualified person is not binding in law.
2. Agreement made under mutual mistake of fact: When both parties to an agreement are under a mutual mistake as to the facts essential to the agreement, then such an agreement is void.
3. Agreement made for an unlawful object: An agreement made for an unlawful object is void from the beginning. For instance, an agreement to smuggle goods across the border is void.
4. Agreement made with unlawful consideration: An agreement made with an unlawful consideration is void. For instance, an agreement to supply drugs in exchange for money is void.
A, a minor, entered into an agreement with B to purchase a car. The agreement is void as A is not competent to contract.
A void contract is a contract that is not enforceable by law and cannot create any legal rights or obligations. According to Section 2(j) of the Indian Contract Act, 1872, a void contract is a contract that is void ab initio, i.e., void from the beginning.
A void contract is different from a void agreement as it has a specific legal meaning in that it is a contract that was never valid. A void contract cannot be ratified or made valid by any subsequent agreement between the parties.
A and B entered into a contract to sell a stolen car. The contract is void as it is for an unlawful object.
In conclusion, a void agreement is an agreement that is not legally enforceable due to certain circumstances, while a void contract is a contract that is void ab initio, i.e., void from the beginning. It is essential to differentiate between these two terms as they have a significant impact on the legal enforceability of agreements and contracts.