What will void a contract?

 

In order to understand what will void a contract it is important to understand the distinction between a void contract and a voidable contract. There is also a distinction with an unenforceable contract. A contract lawyer can explain the difference between these.

Void contracts

A void contract is one that is declared to be a nullity, such that it never had legal effect. A void contract is void ab initio (from the beginning).

Voidable contracts

A voidable contract can be void at the election of a party if the right is exercised within a reasonable time period. If the right to void the contract is not exercised then the contract will be affirmed and valid. Until the right is exercised, the contract remains valid.

The main difference is that there is no opportunity to elect to void a void contract – despite any perceptions to the contrary, the contract was never valid.

Reasons to make a contract void

The main reasons when a contract will be void are:

  • Lack of capacity – one of the five elements of a binding contract is that the parties have legal capacity to enter into legal relations. Minors and bankrupts are the main classes of people who may not have capacity to enter into certain contracts
  • Mistake – as a contract law term, mistake refers to a situation where the contract was entered into based on an erroneous belief. For example, the erroneous belief may have been regarding the subject matter or the contract or the identity of the other party to the contract. Depending on the type of mistake and whether it is a ‘fundamental’ mistake, the contract may be deemed void
  • Illegal contracts – Parliament declares various types of contracts to be illegal and therefore void ab initio. These include: contracts that are in restraint of trade; contracts that attempt to oust the jurisdiction of the courts; and contracts that commit a crime, tort or fraud

If you think you may be in a situation involving a void or voidable contract, speak to a commercial solicitor. In addition to bringing the contract to a definitive end, you may be able to seek a remedy; the normal remedy for a void contract is rescission, through which the parties are put back to the position they were in before purporting to enter the contract.

If you would like to obtain legal advice on void contracts, Contact Law can put you in touch with a local specialist commercial solicitor free of charge. So, if you have any questions or would like our help in finding local commercial solicitors please call us on 0800 1777 162 or complete the web-form above.

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