A voidable contract is a contract that is initially valid and enforceable, but one or both parties have the option to avoid the contract if certain conditions are met. For example, if a contract is signed under duress or undue influence, the party who was coerced or influenced may have the option to void the contract. Alternatively, a contract may be voidable if one party was not of legal age or did not have the capacity to enter into a contract.
In contrast, a void contract is a contract that is not valid from the outset, meaning it is not legally enforceable and has no legal effect. For example, a contract to engage in illegal activities or to violate public policy is void. A contract that violates a law or is against public policy is void and cannot be enforced by either party.
In India, voidable and void contracts are governed by the Indian Contract Act, 1872. The Act defines a void contract in Section 2(g) as a contract that is not enforceable by law, and a voidable contract in Section 2(i) is a contract that, at the option of one or more parties but not at the option of the other party or parties, is legally enforceable.
Under the Act, a contract can be voidable for various reasons, including coercion, undue influence, fraud, misrepresentation, mistake, and incapacity of one or more parties to the contract. Section 16 of the Act specifically states that a contract is voidable if it is entered into under coercion or undue influence, while Section 17 provides for the voidability of contracts entered into due to fraud. Section 20 also deals with contracts made by persons who are of unsound mind or minors, which may be voidable or void depending on the circumstances.
In addition to these provisions, the Indian Contract Act also contains provisions related to void contracts, such as Section 23, which states that agreements that are opposed to public policy are void, and Section 24, which states that agreements in restraint of legal proceedings are also void.
VOIDABLE AND VOID CONTRACT CASE LAWS
Here are some case laws related to voidable and void contracts in India:
Mohori Bibee v. Dharmodas Ghose (1903)
In this case, the Privy Council held that a contract entered into by a minor is voidable, meaning that the minor has the option to either ratify or repudiate the contract upon attaining a majority. The court also held that if the minor repudiates the contract, they are entitled to recover any money or property paid or delivered under the contract.
Satyabrata Ghose v. Mugneeram Bangur & Co. (1954)
In this case, the Supreme Court held that a contract that is illegal or prohibited by law is void ab initio (from the beginning). The court also held that a contract that is discovered to be void cannot be enforced, and any money or property paid or delivered under the contract must be returned.
Balfour v. Balfour (1919)
In this case, the court held that an agreement between husband and wife, made during the course of their marriage and without any intention of creating legal relations, is not a contract and is therefore void. The court held that there must be a clear intention to create legal relations in order for a contract to be valid.
New Delhi Municipal Council v. Pan Singh and Sons (1987)
In this case, the court held that a contract that is entered into without following the necessary formalities, such as the requirement for public tender, is void. The court held that the public tender requirement is a mandatory procedural requirement that must be followed in order for a contract to be valid.
Overall, the Indian Contract Act provides for clear definitions of voidable and void contracts, as well as provisions related to the circumstances under which contracts may be voidable or void.In summary, a voidable contract is initially valid but may be avoided under certain conditions, while a void contract is not valid from the outset and has no legal effect.