DIFFERENCES BETWEEN VOID/ VOIDABLE/ AND UNLAWFUL AGREEMENTS
Differences Between Void, Voidable, and Unlawful Agreements
Legal agreements form the cornerstone of modern business and personal transactions, providing a framework for parties to establish rights and responsibilities. However, not all agreements are created equal in the eyes of the law. Some agreements lack legal enforceability due to their nature or circumstances surrounding their formation. Three important categories of such agreements are void, voidable, and unlawful agreements. Each of these terms has distinct legal implications and consequences, which this article will explore in detail.
- Void Agreements:
A void agreement is a contract that lacks legal effect right from the beginning. Such agreements are considered null and void, and they hold no legal standing. These agreements are deemed to be invalid and unenforceable from the outset due to the fundamental flaws in their formation. Several scenarios can render an agreement void:
- Agreements Against Public Policy: Contracts that promote illegal activities or go against established public policy are void. For instance, a contract to engage in human trafficking or drug trafficking would be void.
- Agreements with Uncertain or Impossible Terms: If the terms of the contract are ambiguous, vague, or impossible to fulfill, the agreement is void. For instance, a contract to sell a mythical creature would fall under this category.
- Agreements with Consideration Not Lawfully Possible: Consideration is an essential element of a contract. If the consideration offered in exchange for a promise is illegal or against public policy, the agreement is void. For example, an agreement to pay someone to commit a crime would be void.
- Voidable Agreements:
Unlike void agreements, voidable agreements are initially valid and enforceable, but one or more parties have the option to void or cancel them due to certain legal defects or the circumstances under which they were formed. The party with the option to void is typically the one at a disadvantage. Common situations that lead to voidable agreements include:
- Lack of Free Consent: If one party’s consent was obtained through coercion, undue influence, fraud, misrepresentation, or mistake, the affected party has the right to void the contract.
- Agreements with Minors: Contracts entered into with minors (individuals below the age of majority) are usually voidable at the minor’s discretion. Upon reaching the age of majority, the minor can choose to either uphold or void the agreement.
- Agreements Under Duress: If a party enters into an agreement due to threats or physical harm, the contract may be voidable.
- Unlawful Agreements:
Unlawful agreements, also known as illegal agreements, are contracts that involve unlawful consideration or purposes. These agreements are not inherently void but are unenforceable in a court of law due to their illegal nature. Unlawful agreements can fall into various categories:
- Agreements Contrary to Statute: Contracts that violate existing laws and regulations are considered unlawful. For instance, a contract to engage in price-fixing, which is prohibited by antitrust laws, would be unlawful.
- Agreements Defeating Legal Proceedings: Contracts designed to obstruct or defeat the legal process are unlawful. For example, an agreement to bribe a witness to change their testimony would be considered unlawful.
- Agreements Injurious to Public Interest: Contracts that harm the general public’s well-being or violate public policy are unlawful. An agreement to monopolize a critical industry, leading to limited competition and higher prices, would be against public interest and unlawful.
In conclusion, understanding the differences between void, voidable, and unlawful agreements is crucial in navigating the complex landscape of contract law. While void agreements are inherently null and void, voidable agreements can be rescinded under specific circumstances, and unlawful agreements involve contracts that are unenforceable due to their illegal nature. To ensure the validity and enforceability of contracts, parties should always seek legal counsel and ensure their agreements adhere to legal standards and ethical principles.
