Key Takeaways

  • Void ab initio means "void from the beginning" and renders a contract legally nonexistent.
  • Such agreements violate legal requirements like capacity, consent, or legality.
  • Void ab initio contracts are treated as if they never existed—no rights or duties arise.
  • Common examples include contracts involving fraud, minors, duress, or illegal subject matter.
  • There is a key distinction between void, voidable, unenforceable, and invalid contracts.
  • Legal consequences can be severe, especially if an illegal purpose was involved.
  • Courts may refuse any remedy, including restitution, in void ab initio cases.
  • Understanding the doctrine is vital in business, employment, family, and real estate law.

A void ab initio agreement is Latin for "void from the beginning." This means that legally, a contract was void as soon as it was created. The parties of the contract are not legally related based on what was written in the agreement because the agreement in question was never valid. However, certain exceptions do apply. This type of agreement can never be void because it was never a legal contract to begin with.

Impossibility of Performance

With any contract, unforeseen circumstances can occur that make it difficult or impossible for the terms of the agreement to be fulfilled. This situation is quite common within contract law. This is known as impossibility of performance and under the doctrine of frustrate will result in discharge of the contract duties. Unlike with void ab initio contracts, when impossibility of performance occurs, the parties are responsible for expenses associated with discharge and termination.

Valid Contract

A contract that can be legally enforced is considered valid. In this type of contract, a party is compelled by the other party to either do or not do something. Each party is legally required to perform based on the terms of the contract or can be subject to a remedy ordered by the court. For example, if you sell an acre of land to another farmer for $50,000 but fail to allow him or her to occupy the land, you can be sued to recover payment.

What Makes a Contract Void Ab Initio?

A contract is considered void ab initio when it was never valid from the outset. This designation goes beyond a typical void or voidable contract—it renders the agreement as though it never existed in the eyes of the law.

Several factors can make a contract void ab initio:

  • Lack of Capacity: One or more parties lacked the legal ability to enter a contract (e.g., minors, mentally incapacitated persons).
  • Illegality: The subject matter of the contract was illegal (e.g., a contract for selling illicit substances).
  • Fraud or Misrepresentation: A party was induced into the agreement through deceit, eliminating any genuine consent.
  • Duress or Coercion: Consent was obtained under pressure or threat, voiding the contract from its inception.
  • Violation of Public Policy: Some contracts are prohibited even if not technically illegal—for example, contracts that restrict fair trade or employment rights.

When declared void ab initio, a contract has no legal effect—no obligations arise, and the parties return to their pre-contract state unless a statutory exception applies.

Void Contract

A contract that cannot be legally enforced by either party is considered void. Characteristics of a void contract include:

  • Not legally enforceable
  • Does not create legal rights or obligations for either party
  • May be against the law or public policy
  • Does not require compensation to be paid to either party
  • May occur if either party signed under duress

For example, if your company enters a vendor relationship with a person who dies, the contract becomes void. Neither party is legally responsible to fulfill the contract and must return any benefits he or she received.

Examples of Void Ab Initio Agreements

Understanding what types of contracts are void ab initio can clarify their application:

  • Contracts with Minors: Agreements with minors (under the age of majority) are typically void unless ratified upon reaching adulthood.
  • Illegal Contracts: A contract to engage in an unlawful act, such as fraud or drug trafficking, is void ab initio.
  • Bigamous Marriage Contracts: A marriage contract entered into by a person already legally married is void ab initio.
  • Fraudulent Contracts: If consent was obtained through identity theft or fraudulent representation, the agreement is void from the beginning.
  • Contracts Lacking Mutual Assent: If the parties were never truly aligned in understanding, the contract may be invalidated ab initio.

Voidable Contract

If either party can opt not to have a contract legally enforced, the contract is considered voidable but not necessarily void. Characteristics of this type of contract include:

  • One or more parties has the option to enforce.
  • This party must have been subject to undue influence, misrepresentation, coercion, or fraud.
  • A party can receive compensation if he or she rightfully revokes the contract.
  • The party whose consent is caused has the contract void option.

For example, if you sign a contract to purchase a car and later find that the condition of the vehicle was misrepresented by the salesperson, you can choose to have the contract declared legally void. You will have your money returned and will not be required to buy the car.

If you decide to cancel the contract, however, you must do so in a reasonable amount of time. You must also prove that misrepresentation, coercion, or fraud took place; if you are unable to do the contract will not be void.

Unenforceable Contract

This type of contract is declared invalid by the court because of either a lack of formality or technical difficulty.

Invalid Contract

This is a catch-all term for various reasons for which a contract cannot be enforced, including but not limited to illegal promises, fraud, insufficient consideration, and duress.

Legal Consequences of a Void Ab Initio Agreement

Void ab initio contracts differ from voidable or unenforceable contracts in terms of legal outcomes:

  • No Enforceability: Courts treat the agreement as if it never existed.
  • No Remedy or Restitution (Generally): In many cases, courts will not assist either party, especially if they both engaged in illegal conduct.
  • Lack of Recovery: Parties usually cannot sue for breach or damages arising from a void ab initio contract.
  • No Ratification: Unlike voidable contracts, void ab initio agreements cannot be fixed or ratified.

In some instances, partial restitution may be permitted to prevent unjust enrichment, especially where only one party acted in bad faith.

Contract Discharge Examples

Contract discharge can occur by agreement, breach, performance, or frustration. The latter happens only under the circumstances of impossibility of performance. If the subject of a contract becomes illegal after the contract is signed, the contract will also be voided. This can be determined either by common law or case law. Case law is more commonly required because the word impossibility is not defined by common law.

Taylor vs. Caldwell established case law for the doctrine of frustration. The plaintiff rented day use of Surrey Gardens and music hall from the defendants. Before the date in question, a fire destroyed the venue. The plaintiff sued for breach of contract, but the court held that the contract was discharged for frustration because the hall was destroyed and thus the terms could not be enforced.

Situations Where a Contract May Be Presumed Void Ab Initio

Certain situations raise presumptions of voidness from the outset. These include:

  • Marriages without legal capacity or consent
  • Employment contracts that violate labor laws
  • Real estate deals lacking necessary legal formalities or involving forged documents
  • Agreements based on fundamental misunderstandings (mutual mistake)

In such instances, courts may summarily dismiss claims involving these contracts, emphasizing the principle that no valid contract ever existed.

Legal Distinctions: Void Ab Initio vs. Voidable and Unenforceable

The concept of void ab initio is often confused with similar contract classifications. Understanding the differences helps avoid misapplication:

Term Meaning Legal Effect Can Be Enforced Later?
Void ab initio Invalid from the beginning Treated as if it never existed No
Void Invalid but may have initially appeared legitimate No legal rights or obligations arise No
Voidable Valid until rescinded by one party Can be enforced or canceled by affected party Yes
Unenforceable Valid but unenforceable due to technicality or defense No court enforcement, but parties may perform Sometimes

Frequently Asked Questions

1. What is the void ab initio meaning in contract law? It means "void from the beginning," indicating a contract that was never legally valid.

2. Can a void ab initio contract be ratified later? No. Since it was never valid, it cannot be ratified or enforced.

3. What is the difference between void and void ab initio? "Void" refers to a contract that is not enforceable, while "void ab initio" means it was invalid from the outset.

4. Can either party recover damages under a void ab initio contract? Generally, no. Courts typically do not provide remedies for void ab initio contracts, especially if illegality is involved.

5. How can I determine if my contract is void ab initio? If the contract involves illegality, fraud, lack of consent, or lack of capacity, it may be void ab initio. An attorney on UpCounsel can help you assess your situation.

If you need help with a void ab initio agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.