What Makes a Contract Invalid?

Contracts can be ruled either valid, void, or voidable. When a dispute arises between parties to an agreement, the court will step in to render the contract valid, void, or voidable. Valid contracts are enforceable while void and voidable ones might not be binding. Void contracts are invalid from the outset while voidable contracts are initially valid unless one party decides to render it unenforceable later on.

What Renders a Contract Void?

When the court rules a contract void, it means that it has no effect or force, so neither party is bound by it. Primarily, this is due to the fact that:

- The object of the agreement is illegal or against the public policy

- Terms and conditions are too vague to comprehend or impossible to fulfill

- There is no consideration or bargain

- Misrepresentation of facts or there is a fraud

For instance, if you are asked to do something that is prohibited under the law, you cannot sign a valid contract to perform such an act. Let’s say you started working for a company and signed an employment contract where your employer asks you to sell prohibited drugs on the streets. The contract would be considered void since it’s against public law to sell drugs.

How is a Contract Voidable?

Voidale contract is in fact valid but only binding on one party; the other party has the discretion to enforce or set it aside.

A tribunal or court can rule out a contract voidable under certain circumstances including:

- A party is in breach

- A party threatened or forced the other party into signing the agreement

- The performance is impossible to carry out by the parties due to mistakes in the agreement

- Presence of undue influence (a party’s will is dominated by another party)

The party affected by the certain situation may choose to either render the contract void or decide to go ahead with it. For instance, if a car dealer sold you a brand new car and it turns out to be a used car, you are free to decide what to do in this situation. You can either continue with the contract or void the contract.