Laws & Regulations

void contract

What is a void contract?

A void contract is a formal agreement that is effectively illegal and unenforceable from the date of its creation. A voidable contract is different from a voidable contract because while voidable contracts are not legally enforceable from the start (and will not be enforced at any point in the future), voidable contracts may become legally enforceable once the underlying contract deficiencies are rectified. At the same time , void contracts and voidable contracts can also be void for similar reasons.

Understanding void contracts

A contract may be deemed void if the agreement is unenforceable as originally written. In this context, a void contract (also known as a “void agreement”) involves an agreement that is illegal in nature or that violates fairness or public policy.

key takeaways

  • A void contract is a formal agreement that is effectively illegal and unenforceable from the date of its creation.
  • A void contract is not the same as a voidable contract, although both can be void for similar reasons.
  • A contract may be deemed void if it is unenforceable as originally written.
  • Invalid contracts can occur when one of the parties involved cannot fully understand the implications of the agreement, such as when a mentally impaired individual or an intoxicated person may not be coherent enough to fully grasp the parameters of the agreement to make it invalid.
  • Agreements for minors or for illegal activities may also be void.

A void contract can occur when one of the parties involved cannot fully understand the meaning of the agreement. For example, a mentally impaired or intoxicated person may not be coherent enough to adequately grasp the parameters of the protocol, rendering the protocol ineffective. Additionally, agreements entered into by minors may be considered void; however, some contracts involving minors have parental or guardian consent and may be enforceable.

Any contractual agreement between two parties that is concluded due to an illegal act is also considered a void contract. For example, contracts between illicit drug suppliers and drug dealers cannot be enforced in the first place due to the illicit nature of the agreed activities.

A contract may also be void if a change in law or regulation occurs after an agreement is reached but before the contract is performed, and if a previously legal activity described in the document is now deemed illegal.

Cancellable and void contracts

While void contracts are generally considered unenforceable by design, if the agreement is feasible, the contract may be deemed void, but the circumstances surrounding the agreement are inherently problematic. This includes agreements where one party withholds information or knowingly provides inaccurate information. Failure to disclose items or misrepresent information as required by law may void the contract but does not automatically void it. A contract or agreement is void if one party is allowed to cancel the contract due to the illegal or unfair (revocable) conduct of the other party.

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