1. About Void Contracts
2. About Voidable Contracts
3. What Makes a Valid Contract?

Void, valid, and voidable contracts are agreements that can briefly be described as follows:

  • Void: Not an actual contract and is unenforceable
  • Valid: Legally binding and enforceable in a court of law
  • Voidable: Valid and enforceable but contains a flaw that may make it void

About Void Contracts

Void contracts are not contracts. In most cases, a void contract misses one or more essential elements that would make it valid. Because it's not an actual contract, neither party to it has to do anything to terminate it.

When the contract is created, it may be valid if it meets all required conditions for validity, such as capacity and free consent. However, an impossibility to act or a future change in the law, making performance impossible, makes the contract void, ceasing the enforceability. When a contract is opposed to public policy, that also ceases enforceability. Neither party can sue for non-performance.

Features of a void contract include the following:

  • It's not legally enforceable.
  • It imposes no obligations on the parties.
  • It fails to create legal rights.
  • It's against the law.
  • Neither party shall receive compensation.

Examples of void contracts include the following:

  • Contracts with a party who's not mentally or legally competent, such as someone with a mental illness or a minor
  • Contracts that involve illegal actions, such as committing a crime
  • Contracts requiring an impossible performance or the occurrence of an impossible event
  • Contracts that are too unfair
  • Contracts restraining certain activities, such as the right to work or the right to choose one's spouse

Using these criteria, a contract to kill is void because its purpose is illegal.

About Voidable Contracts

Voidable contracts have the necessary elements to be enforceable, so they appear to be valid. However, they also have some kind of flaw that makes it possible for one or both parties to void it. A voidable contract may start out being legally binding but become void. It's still considered valid if an injured party doesn't take action.

Most sales contracts include contingency clauses, making them voidable.

To enforce the legality of a voidable contract, one of the parties has to use its option to enforce it. Either party has the legal authority to perform or not perform to the contract. Typically, only one of the parties is bound to the terms. The party that isn't bound may cancel the contract, making it void.

The primary difference between void and voidable contracts is that a void contract can't be legally performed, while a voidable agreement can still be performed, as long as the unbound party doesn't void it prior to performance.

Voidable contracts have the following features.

  • One or both parties has the option to enforce it.
  • A party that's been defrauded, coerced, or misled into signing the contract can object to its validity.
  • Either party has the option to revoke consent.
  • Contracts entered into using undue influence, fraud, misrepresentation, or coercion are voidable contracts.

Examples of voidable contracts include the following:

  • Contracts involving a minor as one of the parties (minors can walk away from contracts)
  • Contracts that tricked or forced a party into them
  • Contracts involving an incapacitated party at the time of signing; incapacitated includes being drunk, delusional, or insane

Just because someone enters into a contract under duress or fraud doesn't make it void. It just makes it voidable.

What Makes a Valid Contract?

Valid contracts have all the required elements and are legally enforceable in court. A valid contract creates legal obligations between contractual parties. It gives a party cause to compel another party to do or not do something.

Parties are legally responsible for performance in the contract. If one party commits breach of contract, the other can take the case to court.

In many cases, signing on the dotted line obligates you to perform to the contract, but there are instances that cause contracts to be unenforceable in a court of law. In the field of contract law, there are many variables that go into making a contract valid or not. Things may become complicated when you try to understand what makes an agreement legally binding. If you have any questions about contracts, consult with a professional who's skilled in that arena.

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