Contracts are an essential part of any business transaction. They lay down the terms and conditions that the involved parties agree upon to ensure the smooth and legal functioning of the business. But not all contracts are as legally binding as we might think. In this article, we will discuss the difference between void, voidable, and unenforceable contracts, along with examples to help you understand them better.
Void Contracts
A void contract is one that is not legally binding from the outset due to its nature or subject matter. It is considered null and void from the beginning, and it cannot be enforced by any of the parties involved. These contracts are considered to have never existed in the eyes of the law.
Example: A contract made with a minor would be considered void. Since minors are not legally allowed to enter into contracts, any agreement they make is automatically void.
Voidable Contracts
A voidable contract is one that appears to be legally binding at first glance, but it has a flaw that makes it challengeable by one or more parties involved. The contract can be voided or cancelled at the discretion of one or more parties. Until it is voided or cancelled, the contract is considered legally enforceable.
Example: A contract signed by an individual under duress, coercion, or fraud can be voided by the victim. Suppose a person is threatened with physical harm and forced to sign a contract. In that case, the contract is considered voidable at the discretion of the victim.
Unenforceable Contracts
An unenforceable contract is one that appears to be legally binding at first, but it cannot be enforced by any of the parties involved due to its legal limitations or government regulations. These contracts may have violated certain laws or lacked required elements, making them unenforceable in court.
Example: A contract that is not in writing may be considered unenforceable, depending on the jurisdiction. Some legal agreements require written documentation to be enforced, such as real estate contracts. If such an agreement is not in writing, it may be considered unenforceable in some states.
Conclusion
In summary, void contracts, voidable contracts, and unenforceable contracts are three different types of legal agreements. Void contracts are considered null and void from the beginning, whereas voidable contracts can be challenged or cancelled by one or more parties involved. Unenforceable contracts are agreements that lack legal enforcement due to legal limitations or government regulations. Understanding the difference between these types of contracts is essential, as it helps businesses avoid legal disputes and ensures that their contracts are legally valid.