Definition: Void Contract, as the name suggests is a contract which fails to be enforceable by the court of law, is said to be a void contract, at the time when it discontinues enforceability.
Hence we can say that any contract, which cannot be legally enforceable or which does not have any legal effect is a void contract. These contracts are once valid but are no longer enforceable
Teena agrees to make an artistic painting for Joseph, for adequate consideration. After a few days, Teena dies in a road accident. As the contract becomes impossible to perform. It becomes a void contract.
When contracts become void?
Void Contracts are valid contracts when they are entered into, but they fail to enforce afterwards, because of certain reasons discussed as under:
- A contract turns out as void when after the formation of the contract, due to the happening of an event which is not under the control of the promisor, the performance of contract turns out as impossible, such as the destruction of the subject matter of the contract, makes it void.
For instance: Tom agrees to repair Harry’s motorbike for ₹ 10,000 after one week. After the formation of the contract, Harry’s bike has been stolen. In such a case, the contract becomes void, as the subject matter is lost.
- A valid contract becomes void by a change in certain circumstances, supervening impossibility or subsequent illegality (change in law), making it a void contract.
For instance: Suppose Mary agrees to supply 5 quintal rice to Alex, but after the formation of the contract, the government makes a change in the law and prohibits the trade of grains to retail suppliers. In such a case, the contract becomes void due to subsequent illegality.
- Any contract to perform or not perform anything, if an uncertain future event takes place, turns out as void when the event becomes impossible to take place.
For instance: Daniel makes a contract with Miranda to sell his flat for ₹ 30 lakhs, if his sister returns to the country within one year. His sister dies in that year and the contract becomes impossible, making it void.
- In case if there is a voidable contract, at the choice of the aggrieved party, turns out as void, when the option is exercised by the concerned party.
For instance: Suppose the consent of the parties is not free, then the contract can be avoided on the grounds of coercion, undue influence, fraud and misrepresentation.
Restoration of Advantage
If any of the party has received any advantage, concerning the contract, is obligated to restore it, or compensate for the same, to the party from whom the advantage has been received.
- Example: Arhaan is a popular dancer who contracts with Deepak, the manager of a 5-star hotel, to dance at the inaugural function, for which Arhaan is paid handsome money, in advance.
On the date of inauguration, Arhaan is too ill to dance. Now, Arhaan is not bound to compensate Deepak for the loss of profits, which the hotel would have earned if he had been able to dance. However, Arhaan is bound to repay the sum received as advance, as it is treated as an advantage to him.
Void contracts are actually not a contract and so, it does not fall in the category of contract, however, to identify and differentiate it from other contracts, such contracts are labelled as a void contract.
Further, there is a fine line of difference between a void contract and void agreement, in the sense that void agreements are void ab initio, i.e. void from the very beginning, whereas void contracts are valid at the time of entering into a contract, but subsequently becomes void.