Difference Between Void Agreement and Void Contract

Introduction:

A void agreement refers to a type of agreement that is void ab initio. It means it is void from the beginning when it is made. In contrast,  a void contract is legally valid at once when it is made, but after that, it becomes void due to some uncontrolled circumstances of the contracting parties. 

In simple words, we can say that a void agreement is void from the beginning, but a void contract is legally enforceable at the beginning; subsequently, it becomes void due to some unexpected or uncontrolled circumstances, such as changes in government policy or an act of God. In this article, we discuss the difference between a void agreement and a void contract. So please stay tuned and read below.

Comparison Chart of Void Agreement and Void Contract

To better understand the difference between a void agreement and a void contract, first we should know that there are some comparisons between them, which are listed below.

Definition of Void Agreement:

The Indian Contract Act, 1872, under Section 2(g), defines a void agreement. According to it, an agreement that is not enforced by law is called a void agreement. That type of agreement cannot be challenged in a court of law; it cannot confirm any rights to the contracting parties. A void agreement is void from the beginning when it is created; that’s why it cannot be enforced under the contract.

To become a legally valid and enforceable agreement, it needs to meet some essential elements of a valid contract, which are described under section ten of the Indian Contract Act, 1872. If any of these essential elements are missing in the agreement, it will become void. These include:

• If the contracting parties are not competent under the law, such as a minor, lunatic, alien enemy, etc. 
• If the subject and object of an agreement are unlawful.
• If an agreement is created for the purpose of restricting a person from marrying.
• Any agreement which is made by the contracting party under a mistake or fact of the material part of an agreement.
• Any agreement which is created for the purpose of restricting trade.
• Wagering agreements.

Let’s understand with an example of a void agreement:

Suppose Mr Ravi offers Mr Siam, who is a minor, to supply 500 kg of rice for Rs.10,000/- on a certain future date. Mr Siam failed to supply the stated quantity to Mr Ravi within the time period. Now, in this situation, Mr Ravi cannot file a lawsuit against Mr Siam because he was a minor when Mr Ravi offered him such an agreement, which was made with Mr Siam, who is minor is a void ab-initio, and there is no legal validity to an agreement under the law.

Definition of a Void Contract: 

The Indian Contract Act, 1872, under Section 2(j) defines a void contract. According to that, a void contract has no longer legal valid contract and cannot be enforced by law; the contracting parties have no right to enforce it under the law.

Void contracts are legally valid when the parties enter into the contract. It also fulfils the legal requirements laid out under section 10 of the Indian Contract Act, 1872. But at a later stage, due to some unforeseen reason, it becomes void because of the impossibilities to perform that contract. It may include: a change in the law and subsequent illegality, a contingent contract, a contract declared voidable by the court, etc.

Let’s understand with an example of a Void Contract:

Suppose Mr Ravi entered into a contract with Mr Siam’s company to dance at their event. But before the performance date, he was injured in an accident and was unable to dance on the date of the event. In this situation, the side contract becomes void.

Difference Between Void Agreement and Void Contract:

The words ” void agreement and void contract” look like the same meaning, but there are differences between them, which are listed below. 

• As per the provisions of law, a void agreement does not confer legal rights on the parties; it is not enforceable by law; it is void ab initio. While a void contract is valid at the time of its formation, at a later stage it becomes unenforceable due to uncontrollable circumstances.
• An agreement is void when it is created by the parties. In contrast, void contract is valid at the time of creation by the parties, but later it becomes void.
• A void agreement is never valid under the law, while a void contract is valid until it is declared void under the law.
• A void agreement is void because of the absence of one or more essential elements of a legally valid contract. On the other hand, avoid contract is void because of not possibilities of performance due to certain uncontrolled results or consequences.
• A void agreement does not satisfy the legal requirement which is described under Section 10 of the Indian Contract Act,1872. On the other hand, a void contract fulfils all the legal requirements which are described under Section 10 of the Indian Contract Act1872. But at a later stage, it cannot be enforced by law due to some unexpected circumstances and is held to have become void.
• Under a void agreement, restitution or restoration is not allowed; however, in some cases, after considering the circumstances, restitution may be allowed on reasonable grounds. On the other hand, restitution is allowed to the contracting parties when the contract is valid and finally becomes void. 

Conclusion:

After the discussion and example mentioned above, we can clearly find the difference between a void agreement and a void contract. A void agreement does not confer any legal rights or obligations to the contracting parties. A void contract is legally valid at the creation of the contract, and it becomes void after considering some uncontrolled or unexpected circumstances.