Difference Between Void Agreement and Void Contract (With Table)

Every company uses agreements and contracts to run its businesses successfully as they form a commitment or contract between two parties. All agreements may not always be validated by law. However, a contract refers to an agreement that is legitimated by law. So, all contracts are considered as agreements but not all agreements are considered as contracts.

Void Agreement vs Void Contract 

The difference between a void agreement and a void contract is that a void agreement refers to an agreement between two or more parties that is invalid to enforce by the court of law. A void agreement does not have any legal consequences and cannot be validated by law at any stage. On the other hand, a void contract is a contract that becomes invalid when one party fails to fulfill the conditions of the contract. 

The void agreement is a contract with no legal values and cannot be legitimate by a court of law. According to the Indian Contract Act, a void agreement is an agreement that has no legal validity. If one or more conditions, fixed by Section 10, of an agreement, remains unfulfilled then the agreement becomes a void agreement.

A void contract is a contract that is not legally invalid from its inception and can be enforced and legitimated by a court of law. But it became invalid when one party fails to fulfill the conditions of the contract. A void contract can arise for several reasons: inclusion of any unlawful consideration or object, incompetence and performance impossibility.

Comparison Table Between Void Agreement and Void Contract 

Parameters of ComparisonVoid AgreementVoid Contract
DefinitionA void agreement is a contract or agreement which is illegal and cannot be legitimized by a court of law. A void contract is valid and legitimate at its beginning but becomes void or illegal later.
Essential elementsCrucial elements like acceptance, offer, capacity, and consideration to agree or contract among others are not available.
The essential elements are available in the beginning but afterward, the parties involved with it make it void.
Third-party involvementA third party doesn’t involve a void contract as it was never legitimized by the law.
Third-Party involvement is common in the void contract and it acquires a good title as the contract is legalized at first.
Compensations and damagesUnder the void agreement, the concept of compensation and damages does not arise if the sorties are needed to fix their differences and one of the individuals fails to fulfill his/her obligations.
In a void contract, if any individual fails to fulfill his/her obligation or compensate the other party in terms of money or compensation it may be considered fair by the law.
Obligations and rightsIt does not create any obligations or rights to all involved parties as the law does not legitimize a void agreement.It creates obligations and rights to all involved parties. A party using any service or good as his/her rights needs to pay for the service or good.

What is Void Agreement?

A void agreement is an agreement or contract which is illegal and cannot be legitimized by the law of court. According to the Indian Contract Act, a void agreement is an agreement that has no legal validity. This type of agreement cannot be challenged with the help of the law. It doesn’t have any legal consequences.

A void agreement is invalid from its inception and it cannot be turned into a legal contract further. To become valid an agreement needs to have all the required elements as described under Section 10. In case an agreement fails to have any one or more required elements it becomes a void agreement.

Agreements that are declared as void include an agreement that is made with incompetent parties like an alien enemy, minor or lunatic; agreement with unlawful consideration, agreement restricting someone from marrying, agreement restricting trade, and so on.

Under the void agreement, the concept of compensation and damages does not arise if the sorties are needed to fix their differences and one of the individuals fails to fulfil his/her obligations. It does not create any obligations or rights to all involved parties as the law does not legitimize a void agreement.

Crucial elements like acceptance, offer, capacity, and consideration to agree or contract among others are not available in the void agreement. A third party doesn’t involve a void contract as it was never legitimized by the law.

What is Void Contract?

According to Section 2 of the Indian Contract Act,1872, a void contract refers to a contract that cannot be legalized and enforced by a court of law and loses its legal entity. This type of contract cannot be used by any party as it has no legal entity. 

Void contracts are legalized at first as they fulfil all the requirements of enforceability, fixed by Section 1o of the Indian Contract Act of 1872. But later on, due to the impossibility to fulfil the conditions or requirements it becomes void. 

There are several reasons due to which a valid contract becomes a void contract by law. If the law changes against the conditions of the contract, or voidable contract’s repudiation, the impossibility of supervening, and so on.

For example, a singer makes a contract with a restaurant to perform her song in that restaurant. But the day before the function she met with an accident for which she was hospitalized with severe injury and prescribed one-week bed rest strictly by the doctor. In this case, cannot perform at the restaurant as she agreed to in the contract. In this case, the contract becomes void. 

In a void contract, if any individual fails to fulfill his/her obligation or compensate the other party in terms of money or compensation it may be considered fair by the law. It creates obligations and rights to all involved parties. A party using any service or good as his/her rights needs to pay for the service or good.

Main Differences Between Void Agreement and Void Contract

  1. A void agreement is a contract or agreement which is illegal and cannot be legitimized by a court of law. On the other hand, A void contract is valid and legitimate at its beginning but becomes void or illegal later.
  2. In void agreement, Crucial elements like acceptance, offer, capacity, and consideration to agree or contract among others are not available. But, the essential elements of void contract are available in the beginning but afterward, the parties involved with it make it void. 
  3. A third party doesn’t involve a void contract as it was never legitimized by the law. On the contrary, Third-Party involvement is common in the void contract and it acquires a good title as the contract is legalized at first.
  4. Under the void agreement, the concept of compensation and damages does not arise if the sorties are needed to fix their differences and one of the individuals fails to fulfill his/her obligations. In a void contract, if any individual fails to fulfill his/her obligation or compensate the other party in terms of money or compensation it may be considered fair by the law.
  5. It does not create any obligations or rights to all involved parties as the law does not legitimize a void agreement. It creates obligations and rights to all involved parties. A party using any service or good as his/her rights need to pay for the service or good.

Conclusion

From a significant part of daily work-life, every individual needs to understand the difference between a void agreement and a void contract. Agreements and contracts are used to form the main base of collaboration and communication between two or more parties. These agreements and contracts help to obtain a fair share of the company profits by each of the employees and enhance the compliance of the company.

The main difference between a Void agreement and a void contract is that void agreement has no legal entity and cannot be legalized and enforced by the court of law from its beginning. It has no legal sequences. On the contrary, a void contract has a legal entity and can be enforced by the court of law initially. But later on, due to unfulfilling the legal conditions it becomes void.

References

  1. https://heinonline.org/HOL/LandingPage?handle=hein.journals/ubclr14&div=16&id=&page=
  2. https://heinonline.org/HOL/LandingPage?handle=hein.journals/allr6&div=13&id=&page=
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