Difference Between Void and Voidable Agreements
1. Meaning
Void Agreement:
A void agreement is not enforceable by law from the very beginning. It has no legal effect and is treated as if it never existed.
Section 2(g) of the Indian Contract Act, 1872 defines a void agreement as:
“An agreement not enforceable by law is said to be void.”
Voidable Agreement:
A voidable agreement is enforceable by law at the option of one or more parties, but not at the option of the other(s). This means one party is bound, while the other can either choose to enforce it or declare it void.
Section 2(i) of the Indian Contract Act, 1872 defines a voidable contract as:
“An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other(s), is a voidable contract.”
2. Validity
| Aspect | Void Agreement | Voidable Agreement |
|---|---|---|
| Status from Beginning | Invalid from the start (void ab initio) | Valid when formed, but can become void later |
| Enforceability | Cannot be enforced at all | Enforceable at the option of one party |
| Consent | May lack legal elements entirely (e.g., unlawful object) | Consent obtained through coercion, fraud, etc. |
3. Causes
Void Agreements May Result From:
Lack of consideration
Unlawful object or purpose
Agreement in restraint of marriage or trade
Agreement made by a minor
Agreement without possibility of performance
Voidable Agreements May Result From:
Coercion (Section 15)
Undue Influence (Section 16)
Fraud (Section 17)
Misrepresentation (Section 18)
Mistake (under certain conditions)
4. Legal Consequences
Void Agreement: No rights or obligations arise.
Voidable Agreement: Rights and obligations exist until the aggrieved party rescinds the contract.
5. Examples and Case Laws
A. Void Agreement – Example & Case Law
Case: Balmukund vs. Kamla Wati (AIR 1964 Punjab 508)
Facts: An agreement was made with a minor.
Judgment: The court held that an agreement with a minor is void ab initio (from the beginning), as a minor is not competent to contract under Section 11 of the Indian Contract Act.
Principle: Any agreement entered into by a person who is not competent to contract is void.
B. Voidable Agreement – Example & Case Law
Case: Ranganayakamma vs. Alwar Setti (1889) ILR 13 Mad 214
Facts: A young widow was forced to adopt a boy under coercion as a condition for performing her husband's funeral rites.
Judgment: The court held that consent obtained under coercion makes the agreement voidable under Section 15 of the Indian Contract Act.
Principle: The aggrieved party (the widow) had the option to either continue with the contract or void it. Thus, it was a voidable contract.
Case: Derry vs. Peek (1889) 14 AC 337
Facts: A company issued a prospectus stating it had permission to run trams with steam power. Permission was not granted, and the company was sued for fraud.
Judgment: The House of Lords held that since there was a false statement made without reasonable grounds, it amounted to misrepresentation.
Principle: A contract based on misrepresentation is voidable at the option of the misled party.
6. Key Differences Summary Table
| Feature | Void Agreement | Voidable Agreement |
|---|---|---|
| Definition | Not enforceable by law | Enforceable at the option of one party |
| Validity | Invalid from the beginning | Valid until rescinded |
| Caused by | Illegal object, incapacity, etc. | Coercion, misrepresentation, undue influence |
| Legal Effect | No effect; null | Can become void if the aggrieved party opts out |
| Right to Sue | No party can sue | Aggrieved party can sue for enforcement |
| Example | Agreement with minor | Contract signed under coercion |
Conclusion
A void agreement has no legal standing from the outset.
A voidable agreement is initially valid, but can be invalidated by one party due to defects in consent.
Understanding the difference is essential in contract law, as it determines the rights and liabilities of the parties involved.
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