Difference between Void and Illegal Agreement

Void agreements and Illegal agreements are both types of contracts that are unenforceable by law. It is evident from the Indian Contract Act, 1872, that there is a fine line separating an illegal agreement from a void one. An illegal agreement is strongly forbidden by law and can result in penalties for the parties involved. A void agreement may not be banned by law.

What is Void Agreement?

Void denotes the absence of legal force, whereas an agreement refers to a mutual understanding between parties about a course of action. A void agreement is, to put it simply, one that is not enforceable by law; i.e., one that is not legally binding. When an agreement is deemed invalid, it no longer has any legal force behind it. The parties do not acquire any legal standing from such an agreement, nor do they acquire any rights or obligations. The empty transaction’s related transactions would be legitimate. According to the Indian Contract Act 1872, some agreements are null and void from the beginning, including those about marriage restrictions, commerce restrictions, legal action restrictions, agreements with minors, and agreements whose purpose or consideration is illegal.

Key Features of Void Agreement:

• An agreement that is void is one that is not enforceable by law and cannot be enforced by either party.
• A void agreement may be voidable, meaning that one party may decide whether to enforce it or not.
• Void agreements are usually the result of a lack of consideration, capacity, or legality.
• A court of law has the authority to declare an agreement void.

What is Illegal Agreement?

An illegal agreement is one that contravenes the law, is criminal in nature, goes against public policy, or is immoral. The agreements that are collateral to the original agreement are also null and invalid since these agreements are void ab initio. The transaction related to or incidental to the primary agreement is referred to here as the collateral agreement. Entering into an illegal agreement is considered an offense in the eyes of the law since it is severely forbidden. Accordingly, the Indian Penal Code penalizes the parties for the same offense. An agreement with ambiguous terms, an agreement to kill someone, etc. are a few instances of illegal agreements.

Key Features of Illegal Agreement:

• An illegal agreement is one that is defined as being against the law and is thus deemed illegal.
• An illegal agreement that cannot be enforced by any party.
• Illegal agreements are usually the result of breaking a law or piece of legislation.
• An illegal agreement cannot be upheld by the legal system.

Difference between Void and Illegal Agreement

Basis	Void Agreement	Illegal Agreement
Meaning	A contract that isn’t enforceable by law is void agreement.	An agreement is illegal if the making of it is prohibited by the law.
Object	Not illegal.	Illegal.
Consequence	When an agreement loses its enforceability by law, it becomes void.	An illegal agreement is null and void ab initio, meaning it is unenforceable from the start.
Prohibition by IPC	No void agreements are not prohibited by IPC.	Yes, illegal agreements are prohibited by IPC.
Scope	Wide.	Narrow.
Penalty	The parties to a void agreement are not subject to any legal penalties.	Parties to an illegal agreement may attract criminal offense and subject to penalty.
Connected Agreements	May not always be null and invalid	All connected agreements are null and void.
Remedy	There are no applicable legal remedies since the contract is deemed invalid.	Since it is seen as illegal and against the law, there are legal remedies possible.
Avoidance	Can be avoided by any party without resulting in legal repercussions.	Can be avoided by both parties, but it may also give rise to legal action and be illegal.
Example	A contract that a minor has signed, as minors are not deemed to have the legal competence to engage into contracts.	A contract for illegal narcotics, as it is prohibited by law to do such things.

Conclusion

Void and illegal agreement are not the same thing. The illegality of the contract, such as a contract with an illegal item or consideration, is one of the elements that renders an agreement invalid. Since a void agreement is void from the start, it has no legal consequences. On the other hand, since it is initiated, an illegal agreement has no legal consequences. All illegal agreements are null and void, yet the opposite is untrue. Other agreements pertaining to an illegal agreement are deemed invalid.

Difference between Void and Illegal Agreement- FAQs

In the event that one side breaches a void agreement, what happens?

A void agreement is not a genuine agreement, hence there are no legal repercussions if one side breaches it.

Are there any legal repercussions for an illegal agreement?

Absolutely, as it is against the law to enter into an illegal agreement, participants may be held accountable for any criminal acts carried out in support of the agreement.

Can a void agreement be amended?

No, as it is not a valid contract, a void agreement cannot be amended.

How do you know if a contract is illegal or void?

By examining an agreement’s validity, conformance to policy, and parties’ capabilities, you can determine if it is invalid or voidable. Agreements that are invalid are unenforceable right away, while agreements that are illegal possess legal consequences for the parties to the contract.

Why do people enter into illegal agreements even though they possess severe penalties?

The reason why people enter into illegal agreements is because they avoid taxes and fees and are not bound by any rules or regulations; these agreements are formed without the need for formal documentation or legal approval. All these features provide them with the flexibility to perform an arrangement without any legal liability, although the consequences are severe.

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