What Is a Void Contract? Examples to Help You Understand
A void contract is a legal agreement that is deemed invalid due to certain circumstances. In simple terms, it is an agreement that is not legally binding and cannot be enforced by either party. Void contracts are different from voidable contracts which are agreements that can be legally unenforceable depending on the circumstances.
There are a number of reasons why a contract may be void. Here are some examples to help you better understand:
1. Illegal Contracts
An illegal contract is a void agreement from the very beginning. Such contracts are made for illegal purposes and fall outside the law. For instance, you may try to sign a contract for illegal gambling or drug trafficking. Such contracts do not hold up in court.
2. Contracts with Minors
Contracts with minors are also void agreements in most cases. In many jurisdictions, individuals under the age of 18 are not allowed to sign legally binding documents. Therefore, if you sign a contract with someone who is not of legal age, the agreement may be considered void.
3. Contracts Based on Fraud
A contract based on fraud is another example of a void agreement. Such contracts are made with the intention of deceiving one of the parties involved. For instance, if you sign a contract for a home renovation project and the contractor misleads you about the quality of the work to be done, that contract will be considered void.
4. Lack of Capacity
If one of the parties involved in a contract lacks the capacity to understand the terms, the contract can be void. For example, if an elderly person suffering from dementia signs a contract with a third party, that contract may be deemed void.
5. Contracts Against Public Policy
Contracts that are against public policy are also considered void. These are agreements that are detrimental to society as a whole. For instance, if you sign a contract with a company that allows them to pollute the environment, that contract will be considered void.
In conclusion, void contracts are agreements that cannot be legally enforced. They are different from voidable contracts which can be legally unenforceable depending on the circumstances. Understanding the reasons behind a void contract can help you avoid entering into agreements that are not legally binding.