As a professional, it’s important to understand the differences between different types of contracts when it comes to their legality. Two common terms that often get confused are “void” and “voidable” contracts, and “void” and “illegal” agreements. Understanding the difference between these terms can help you avoid making costly mistakes in your business dealings.
Void and Voidable Contracts
A void contract is one that is considered to have never existed from the outset. It is a contract that cannot be enforced by either party, and it is considered null and void from the beginning. An example of a void contract is one that is entered into by a person who does not have the mental capacity to enter into a binding contract, such as a minor or someone who is under the influence of drugs or alcohol.
On the other hand, a voidable contract is one that is valid and binding until it is voided by one of the parties. The party that wishes to void the contract must be able to prove that the contract was entered into under duress, fraud, or other illegal means. For example, if one party was threatened into signing a contract, that party might be able to void the contract based on duress.
The key difference between void and voidable contracts is that a void contract was never legal or binding in the first place, while a voidable contract may become invalid if one of the parties takes action to void it.
Void and Illegal Agreements
A void agreement is distinct from a void contract in that it is not a contract at all. An agreement is considered void if it is not legally enforceable, either because it is against the law, public policy, or because it involves an illegal act. An example of a void agreement is an agreement to commit a crime, such as a contract to sell stolen goods.
An illegal agreement, on the other hand, is one that is valid and legally enforceable, but it is against the law. The terms of the agreement may be illegal, but the agreement itself is not voidable because it meets the requirements for a legally binding contract. An example of an illegal agreement would be a contract to pay someone to commit a crime.
The key difference between void and illegal agreements is that a void agreement is not a legally binding contract, while an illegal agreement may be legally binding but is still illegal under the law.
In conclusion, understanding the differences between void and voidable contracts, as well as void and illegal agreements, is crucial for anyone entering into a contract or agreement. It’s always important to consult with a legal professional if you have any doubts or questions about the legality of a contract or agreement. By doing so, you can avoid costly mistakes and ensure that your business dealings are conducted in a legal and ethical manner.