DIFFERENCE BETWEEN VOID AND VOIDABLE CONTRACTS

Void Contract: A void contract is that which is not valid from the outset, and it has no legal effect. A void contract is not a contract at all, as it lacks one or more essential elements required for a valid contract. It is considered to have no legal effect from the outset. For example, a contract to engage in illegal activities or a contract with a mentally incapacitated person might be deemed void. If the contract is void from starting it is known as void ab initio.

A contract can be considered void for several reasons, including:
• The subject matter of the contract is illegal.
• The contract involves fraudulent or deceptive practices.
• One or both parties lacked legal capacity to enter into the contract.
Voidable Contract: A voidable contract is a contract that is initially valid and enforceable, but due to certain circumstances, one party has the option to void (cancel) the contract. These circumstances might include fraud, misrepresentation, undue influence, duress, or the incapacity of one party. If the injured party chooses to void the contract, they can typically do so without incurring liability.
Some common reasons for a contract to be voidable include:
• One party was under duress or coercion when entering the contract.
• One party lacked in capacity to understand the contract terms (e.g., due to mental incapacity).
• The contract was induced by fraud, misrepresentation, or undue influence.

Here’s a detailed differentiation between void and voidable contracts:

Aspect	Void Contract	Voidable Contract
Definition	A contract that is null and has no legal effect from the start.	A contract that is initially valid but may be voided at the discretion of one party.
Legality	Never legally binding or enforceable.	Initially legally binding but can be declared void by one of the parties.
Enforceability	Cannot be enforced by law at any time.	Can be enforced unless and until it is voided by the aggrieved party.
Validity	Invalid from the beginning (ab initio).	Valid until one party exercises their right to void it.
Examples	Contracts involving illegal activities, agreements without consideration.	Contracts made under duress, misrepresentation, undue influence.
Rights of Parties	No rights or obligations can be enforced.	Rights and obligations exist until the contract is voided.
Effect of Voidness	Results in no legal obligations or rights.	Results in the contract being treated as if it never existed, if voided.
Recovery of Consideration	Consideration cannot be recovered because the contract is void from the start.	Consideration may be recoverable if the contract is voided.
Illustration	A contract to commit a crime is void.	A contract signed under coercion is voidable by the coerced party.