Introduction

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.

Agreement

• An agreement is a promise between two entities creating mutual obligations by law.
• Section 2(e) of the Indian Contract Act, 1872 (ICA) defines an agreement as every promise and every set of promises, forming the consideration for each other, is an agreement.

Valid Agreement

• A valid agreement is a contract, which is binding and enforceable. In a valid contract, all the parties are legally bound to perform the contract.
• Section 10 of the ICA states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

Essentials of a Valid Agreement

• Offer and Acceptance
  • All offers must be valid and once accepted, it binds both the parties into a valid agreement.
• Legal relationship
  • Parties to a contract must desire to constitute a legal relationship. It results when the parties know that if any one of them fails to fulfil his/her part of the promise, he/she will be liable for the failure of the contract.
• Lawful consideration
  • Consideration is described as something in return. It is also vital for the validity of the contract. A promise to do something or to provide something without anything in return will not be enforceable by law and, therefore, will not be valid.
• Competency of parties
  • The parties to an agreement should be capable of contracting. In other words, they should be capable of entering into the contract.
• Free consent
  • Another essential of the valid contract is the consent of the parties, which should be free.
  • The consent is considered free when any of the following things do not induce it:
    • Coercion
    • Misrepresentation
    • Fraud
    • Undue influence
    • Mistake
• Lawful objects
  • According to the ICA, an agreement may become a valid contract only if it is for a lawful consideration and lawful object.

Void Agreements

• Void Agreements are not contracts.
• In most cases, a void agreement misses one or more essential elements that would make it valid. Because it's not an actual contract, neither party to it must do anything to terminate it.
• It's not legally enforceable and imposes no obligations on the parties.
• It fails to create legal rights and is against the law.
• There are some agreements which have been expressly declared as void by the ICA. They are:
  • Agreements in which consent is caused by mistake.
  • Agreements of which the consideration or object is unlawful.
  • Agreements without consideration.
  • Agreements in restraint of marriage and in restraint of trade.
  • Agreements in restraint of legal proceedings.
  • Agreements which are uncertain and ambiguous.
  • Agreements by way of wager.
  • Agreements to do impossible acts.

Voidable Agreements

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