Knowing the examples of valid void and voidable contracts is important as a business owner. There are five major types of contracts in the world of business that you will encounter including valid contracts, void contracts, voidable contracts, unenforceable contracts, and illegal contracts.

Valid Contracts

When a contract is valid, it basically means that it is enforceable under both state and federal laws. A valid contract will follow all required contractual elements.

Void Contracts

A void contract is no longer considered a contract at all. Since it has lost its status as a contract, it is unenforceable and has no binding legal effect. Some contracts that are considered void contracts are:

  • Gaming and wagering contracts
  • An insurance policy that was fraudulently represented

It is important to note that all illegal contracts are void, but not all voided contracts were illegal.

Voidable Contracts

A voidable contract is a contract where breaches exist that can render the contract invalid. If it is believed that a contract was not made in good faith, it is up to the aggrieved party to decide if it is good and valid and therefore enforceable. A voidable contract will remain valid unto the point that it is declared void once a breach has been determined.

Unenforceable Contracts

An unenforceable contract is a contract that is valid but is unable to be enforced in a court of law. This can be due to the lack of a vital legal requirement or evidence. For example, the Stamp Act requires that all insurance policy require a stamp and if not stamped the contract can still be valid but would be unable to be enforced.

Illegal Contract

An illegal contract is an agreement that would require one person entering into it to break the law to perform their rights and responsibilities. A contract that opposes public policy can also be deemed an illegal contract. Examples of illegal contracts could include an agreement to sell narcotics, which is illegal. If the contract were brought to court, the contract would be illegal and unenforceable.

Offer and Acceptance

There are two basic elements that are involved in a valid contract. These elements include an offer and acceptance. The initial party outlines the offer in the contract, and the other party provides acceptance when they sign the document.

There are legal requirements for an agreement to be considered legal. For a contract to be legally enforceable both parties must:

  • Agree to the terms freely
  • Be of the age to provide consent
  • Have the mental capacity to enter into a contract legally


For a contract to be valid, the accepting party must have considered the price or value for the exchange presented in the agreement. The consideration does not only have to be money but can also be:

  • A right
  • Interest
  • Benefits

For example, the consideration when buying a car is the one party agrees to provide the car in exchange for money.

Written and Verbal

Though some verbal agreements can be enforceable, some are required to be in writing to be considered valid. Written requirements typically are agreements that involve:

  • Large sums of debts
  • Real property
  • Contracts that will not be carried out in a short period of time

For a contract to be valid, the agreement must be:

  • Legal
  • Consensual
  • Backed up with a consideration
  • Executed by two adult parties

If a contract is considered void, it can never be enforced under the law and the parties signing it will not be bound by any of the terms. A contract can be considered void if:

  • The terms are illegal or against public policy
  • A party did not have the mental facilities to agree to it.
  • A minor is one of the parties
  • The terms are impossible to achieve
  • The contract restricts the right of one party

An example of a void contract would be when someone is hired by an employer, and the terms of the employment require job responsibilities that are considered illegal. Therefore, the contract would be void as it is against the law as it contracts elements.

Tips for Executing a Contract Correctly

There are tips you can follow to ensure that your contract is executed correctly. Some tips to follow include:

  • Clearly state the offer
  • Clarify the components
  • Write everything down
  • Pay attention to the details

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