Contract Basics

An agreement occurs when two or more parties have an understanding and intention to uphold certain obligations regarding some acts in the past or future. An offer means to make a proposal or present something to another person for acceptance or action. Under the law, contracts are fully enforceable. A stranger to a contract refers to an individual or entity that has no relationship with the contract or a person who cannot make any legal claims over the contract.

A party who can enter into a contract is an individual who is legally qualified to be a party to the contract regarding a specific service, fact, or action. Minors, individuals who are not qualified under the applicable laws, and people who are mentally unsound cannot be party to a contract. Under influence refers to a situation where a person is forced to enter into an agreement under duress.

Quasi-Contract & Contingent Contract

A quasi-contract is an agreement that seeks to protect the rights and duties of parties in the absence of a contract. It's mostly used to guarantee equity between parties. However, a contingent contract refers to a contract where the actions of parties depend on the satisfaction or breach of certain terms. For example, a client paying a contractor a specific amount if a construction project is delivered within a particular timeframe.

Performance of a Contract

Performance of a contract refers to the execution or completion of the terms of the agreement, freeing the parties of their obligations in line with the contractual provisions. Demand performance refers to a demand for the execution or completion of a promise in a contract. A demand performance is often made after the death of the party who made the promise.

Void Contract

A void is a null or ineffective contract, statute, judgment, or any other thing. A contract is considered void if its original form cannot be enforced. In that sense, void contracts or void agreements refer to agreements that are against the law, are not fair or against public policy.

Void Ab Initio/Void Contract

The Appellate Division of New Jersey's Superior Court explained that 'void ab initio' refers to a contract which is ineffective from the start because it is against the law or public policy, compared to a contract which was voided at the request of one of the contracting parties. Examples of a void contract include the following:

  • A marriage annulled by a court decision
  • A contract that was mutually canceled
  • A judgment or legislation which an appellate court proclaims is against the constitution.

Void Contract vs. Voidable Contract

A void contract is null and ineffective. On the other hand, there is a possibility that a voidable contract will be rendered null and void, but this fate is not certain for the contract. The main difference between the two terms is that a void contract is legally invalid and unenforceable during its existence. However, a voidable contract can be enforced and legally binding based on the management of its flaws.

Legal Implications of a Void Contract

There are no legal consequences for breaching a void contract. Ratification cannot restore its validity. It doesn't need a court of law to declare it invalid, and the parties don't have to rescind it. A contract can be void for the following reasons:

  • If the agreement was created with a person who for a variety of reasons, is incapable of appreciating the implications of the agreement.
  • Agreements entered into by minors, except where their legal guardians consent to the contract.

Void Marriage vs. Voidable Marriage

A void marriage is invalid from the start. Individuals in a void marriage are not required to ratify the relationship by cohabitation neither do they need an annulment or divorce to opt out of the union. However, parties can request for such official pronouncement to avoid any doubts.

Alternatively, a voidable marriage can be contested in court even after the demise of the contracting parties. Most jurisdictions consider a bigamous marriage void from inception. Marriage between brothers and sisters, aunt and nephew, uncle and niece or ancestors and descendants are also prohibited by law.

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