Introduction
The Contract Act of 1872 governs all kinds of contracts in India. However, the Indian Contract Act does not provide a formulated system for all sorts of contracts. Many other different types of laws are also connected with contract law, either directly or indirectly. If, for some reason, the agreement does not fulfill the requirement described under the provisions of the Contract Act, the said agreement may become void or illegal in terms of the law.
The words Void and illegal agreement confuse us, and we assume that both are the same in legal terms. However, according to the provisions of the India Contract Act, there is a thin difference between void and illegal agreements. This article addresses the legal terms that distinguish between void and illegal agreements.
An existing agreement can be declared void if it is declared void by the court. In contrast, an illegal agreement cannot be enforced after it is made because of the law’s illegality. The illegal agreement that the parties make is void in terms of the law. In contrast, if an agreement is illegal, then any other agreement concerned with that is void in terms of the law.
Definition of Void Agreement
A void agreement is an agreement with no legal existence, so it will not be legally binding to the parties. In other words, the term void means there is no legal obligation, and an agreement means a document made between the parties concerning the course of action. Let’s understand that term with an example. Suppose an agreement that the law cannot enforce is known as a void agreement.
After the declaration of a void agreement, its legally binding effect does not exist. It also does not create any legal rights and obligations for the parties. More so, the contract parties do not have their legal status. However, the transaction concerned with the void agreement is valid.
Some of the agreements are declared void ab initio according to the Indian Contract Act 1872, which are given below;
- Any agreement that is made for restraint to marriage
- Any agreement is made to restrain trade.
- Any agreement that is made to restrain legal proceedings.
- An agreement was made with a minor.
- An agreement based upon an unlawful object or consideration is unlawful.
Definition of Illegal Agreement
An Illegal agreement means any agreement violates the law, may violate any public policy, or is covered by a criminal nature. That kind of agreement is known as an Illegal document. The Illegal agreement is known as void ab initio. That’s why any other agreements made based on an Illegal agreement are also declared Void.
The law does not permit that type of agreement, which is prohibited by law. That’s why the contracting parties involved in such a contract might be punished as an offense in the law, and those parties can be punished under the various provisions of the Indian penal Code.
Let’s look at some examples. Suppose A agreed with B to kill X. That is an illegal agreement because the law prohibits them from doing so if the contracting parties enter into such an agreement, which has terms and conditions not defined in the law, which can also be considered an illegal agreement in the eye of the law.
The difference between void and illegal agreement
The words void and Illegal seem to be similar, but it has some differences between them that are given below;
- An agreement that has lost its legal status is called a void agreement. In contrast, an agreement that is prohibited by law is called an Illegal agreement.
- All void agreements are not void ab initio. Certain agreements might be declared after losing their legal status. On the other hand, every Illegal agreement is void from the beginning.
- A void agreement is not a punishable offense under the law. On the other hand, an illegal agreement falls under a punishable offense under the law.
- An agreement is made based on a void agreement that can be declared void. While the illegal agreement is void initially, if another agreement is made based on that agreement, it can not be enforceable by law.
- The scope of a void agreement is much higher than that of an illegal agreement because sometimes. All void agreements do not fall under the preview of an unlawful agreement. In contrast, all illegal agreements have been covered under the preview of the Void since the beginning.
Difference between void and Illegal agreement in a chart
To better understand the essential difference between void and Illegal agreements, let’s see the caparison chart that is given below;
| Basic Difference | Void Agreement | Illegal Agreement |
| Meaning | An agreement that has no legal enforceability is void in the legal term. | An agreement that is created unlawfully is known as an illegal agreement. |
| Outcome |
An agreement that does not meet any legal enforceability of law and becomes void. | An illegal agreement is void since it begins. |
| Prohibition under the Indian Penal Code | No | Yes |
| Penalty | The penalty can not be laid. The held party to void the agreement is not liable for a penalty. | The penalty can be laid to the parties to an Illegal agreement; they can be penalized. |
| Scope |
The scope is wide | The scope is narrow |
Conclusion
As per the above-detailed discussion of the difference between void and illegal agreements, many things make a contract void and illegal, such as an unlawful object or consideration, legality, legal enforceability, etc. If any agreements are found missing those parameters, they lose their legal status and become unenforceable contracts in the eyes of the law.
Read Also:
Difference Between Tort And Breach Of Contract Under Contract Law
What is the Importance of Free Consent under the Indian Contract Act, 1872?
What is the Standard Form Of Contract?
