Difference between Void and Voidable Contract

When an agreement is enforceable by law, it becomes a Contract. Based on validity, there are several types of contracts, i.e. Valid contracts, Void contracts, Illegal contracts, etc. Void contracts and Voidable contracts are mostly misconstrued, but they are different. A void contract implies a contract that lacks enforceability by law and is not valid from the beginning, whereas a Voidable contract alludes to a formal contract between two parties that could become void on various legal grounds.

What is a Void Contract?

A Void Contract is a kind of contract that is not enforceable by law. At the time of contract formation, the contract is valid as it fulfils all the requisite conditions necessary to constitute a valid contract, i.e. free consent, capacity, consideration, a lawful object, etc. But due to a subsequent change in any existing law or impossibility of an act which is beyond the imagination and control of the parties to the contract, the contract cannot be performed and hence, it becomes void. In addition to this, a party cannot sue another party for the non-performance of a contract. The contract becomes void because of the changes in any law or any government policy for the time being in force in India. Also, the contracts which are opposed to public policy also ceases its enforceability.

For example, X promises Y to sell his horse after one month to Y for Rs.45,000. Before the completion of one month, the horse died. Now, the contract becomes void since the contract cannot be performed, i.e. the object on which both the parties agreed is no more, so there is an impossibility of performance of the contract. This type of contract is known as Void Contract.

What is a Voidable Contract?

Voidable contract is the contract which can be enforceable only at the option of one of the two parties to a contract. In this kind of contract, one party is authorized legally to make a decision to perform or not to perform his part. The party aggrieved is independent to chose the action. The right may arise since the consent of the concerned party is influenced by fraud, coercion, undue influence, misrepresentation, etc. The contract then becomes valid until the aggrieved party does not cancel it. Further, the aggrieved party has the right to claim damages from the other party.

For example, A says to B that he should sell his new bungalow to him at a nominal price, otherwise, he will damage his property and B enters into a contract due to fear. In this situation, the contract is voidable as the consent of B is not free, so he has the right to avoid the performance on his part and in addition, he can also claim for any damages caused to him.

Difference between Void and Voidable Contract

Basis	Void Contract	Voidable Contract
Meaning	A Void Contract is a kind of contract that is not enforceable by law. At the time of contract formation, the contract is valid as it fulfills all the requisite conditions necessary to constitute a valid contract.	Voidable contract is the contract which can be enforceable only at the option of one of the two parties to a contract.
Void ab-initio	Void agreements are void from the very beginning.	Voidable contracts are valid when made and continues to remain valid till the time it is repudiated by the party which is aggrieved.
Validity	The agreement is void since essential elements of a valid contract is missing.	Since the consent of the party is not free, the contract becomes voidable.
Enforceability	Void contracts cannot be enforced by any of the party.	Till the time aggrieved party does not repudiate the contract, it continues to be enforceable.
Right of Third Party	Third party does not acquire any kind of rights.	A third party who in good faith purchases goods and for consideration before the contract is repudiated acquires title of those goods.
Effects of lapse of reasonable time	It can never become a valid contract, even on the expiry of a reasonable time.	On the expiry of reasonable time, it may become a valid contract if the aggrieved party does not repudiate the contract within reasonable time.
Damage	The question of damage does not arises in Void contract.	The aggrieved party can claim damages.

Conclusion

To conclude, both void agreement and voidable contract have certain connotations and legal consequences. A void agreement is a dead agreement since it lacks any kind of legal enforceability, whereas a voidable contract may be legally enforceable. Some kinds of agreements are declared void by law because they are unlawful and opposed to public policy, and also to protect the life and liberty of individual persons.

Hence, any kind of contract formation by illegal means is unenforceable in a court of law.