A valid and void contract are two different types of contracts that parties should be aware of. Specifically, a valid contract is one that was entered into legally and is fully enforceable. This means that it includes all of the required elements of a contract. A void contract, however, is one that a court will deem invalid for a number of reasons, whether it be due to the inability to meet all required elements or any other potential issue that might deem the contract void and therefore, unenforceable.

Elements of a Valid Contract

A valid contract is one that includes all required elements, including the following:

  1. An offer made by one party
  2. An acceptance given by the receiving party
  3. Consideration exchanged between the parties
  4. Mutual assent of both parties
  5. Legal capacity

One of the parties must make an offer to another party, known as the offeree. The offeree must then accept the offer as is, without altering the terms. Thereafter, the parties must exchange consideration, which can be something of monetary value or a promise to do what is expected of them under the agreement.

While the parties might properly have an offer, acceptance, and consideration, this doesn’t necessarily mean that the contract is valid at this point. The parties must have entered into the contract voluntarily and without threat, force, or coercion. Lastly, the parties must have legal capacity to enter the contract. Legal capacity means that the parties must be at least 18 years of age, mentally competent, and not under the influence of alcohol or drugs when having signed the contract.

When it comes to identifying the elements of the contract, and undergoing the steps required, it might take time to accomplish such elements. For example, the offer might be made but not accepted. Instead, the offeree might change the offer by making a counter offer. If this occurs, the original party making the offer is now on the receiving end, and must accept the counter offer.

When all of the aforementioned elements have been met, the parties must confirm that the subject matter of the actual contract is legal. The agreement can be something that would otherwise be fraudulent or illegal. For example, the parties can’t agree to engage in a crime with one another. This contract would not only be void, and therefore invalid, but the parties might also be arrested for an attempt to carry out a fraudulent or illegal activity.

Void vs. Voidable

When identifying if a contract is void or voidable, it is important to know the difference between these two terms. If a court deems a contract void, it means that the contract is invalid and unenforceable. Essentially, the parties will walk away as if the contract never existed. If a contract is voidable, however, this means that one or both of the parties have an opportunity to void the contract. For example, if the court indicates that the contract is voidable by either party, the parties in the contract can choose to either void the contract or continue with the agreement and perform under the agreement. If one of the parties chooses to void the contract, but the other party doesn’t, then the contract will still be deemed void.

A court might deem part of the contract void or voidable, or not all. This could be done with regard to certain provisions of the contract that might otherwise be unfair to one of the parties. When this occurs, the parties are required to negotiate those void terms in the contract and edit or remove them altogether to satisfy the court’s judgment.

An example of when a contract might be voidable is when one of the parties was under the influence of alcohol when having entered into the agreement. While there is generally a determination that the contract is void due to the fact that one of the parties wasn’t legally capacitated, the fact that someone is under the influence of drugs or alcohol while signing the contract might only deem the contract voidable by that party. Therefore, if that party still wants to move forward with the deal, they can.

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