Voidable contract

7 Key excerpts on "Voidable contract"

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  eBook - PDF

  Commercial Contracts

  A Practical Guide to Deals, Contracts, Agreements and Promises

  • Chris Thorpe, John Bailey(Authors)
  • 1996(Publication Date)
  • Woodhead Publishing

    (Publisher)

  So while inva-lidity is an important legal subject, the businessman needs only a sufficient knowledge of it to enable him to avoid entering into an invalid contract. 10.1.2 Types of invalidity A contract may be void, voidable or unenforceable, and we need to understand the difference between these three terms. 1. Void contract: A void contract is neither valid nor enforceable. In the eyes of the law, and no matter what the parties may have thought, there never was a contract in the first place. It follows that neither party is bound to perform his obligations under that contract and no legal action can be maintained against him if he fails to do so. An extreme and obvious example of a void contract is an underworld 'contract', that is an agreement to kill. 2. Voidable contract: A Voidable contract is a valid and enforceable contract which one party has the right to nullify (or, in legal language, 'avoid'). If he exercises that right the contract is then void with retrospective effect, as if it had never existed. If he does not exercise that right the contract remains valid and enforceable. We noted in section 2.2.2 that, with certain excep-tions, a contract entered into by a minor is voidable at his option. 3. Unenforceable contract: Normally if a contract is unenforceable then neither party can maintain a legal action against the other if he fails to perform it. Although in legal theory an unenforceable contract is valid, both parties can ignore their obligations under it with impunity. There is therefore no practical distinction be-tween a contract which is void and a contract which is merely unenforceable. An example of an unenforceable contract is an agreement to marry, which has been unenforceable since 1971 by Section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1970. Another example, as we saw in section 1.2.5, is an oral guarantee. 217

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  eBook - ePub

  The Common Law

  • Oliver Wendell Holmes Jr., Oliver Wendell Holmes(Authors)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  CONTRACT.—III. VOID AND VOIDABLE    

  T HE elements of fact necessary to call a contract into existence, and the legal consequences of a contract when formed, have been discussed. It remains to consider successively the cases in which a contract is said to be void, and those in which it is said to be voidable,—in which, that is, a contract fails to be made when it seems to have been, or, having been made, can be rescinded by one side or the other, and treated as if it had never been. I take up the former class of cases first.

  When a contract fails to be made, although the usual forms have been gone through with, the ground of failure is commonly said to be mistake, misrepresentation, or fraud. But I shall try to show that these are merely dramatic circumstances, and that the true ground is the absence of one or more of the primary elements, which have been shown, or are seen at once, to be necessary to the existence of a contract.

  If a man goes through the form of making a contract with A through B as A’s agent, and B is not in fact the agent of A, there is no contract, because there is only one party. The promise offered to A has not been accepted by him, and no consideration has moved from him. In such a case, although there is generally mistake on one side and fraud on the other, it is very clear that no special doctrine need be resorted to, because the primary elements of a contract explained in the last Lecture are not yet present.

  Take next a different case. The defendant agreed to buy, and the plaintiff agreed to sell, a cargo of cotton, “to arrive ex Peerless from Bombay.” There were two such vessels sailing from Bombay, one in October, the other in December. The plaintiff meant the latter, the defendant the former. It was held that the defendant was not bound to accept the cotton.1

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  Law

  Made Simple

  • D. L. A. Barker, C. F. Padfield(Authors)
  • 2014(Publication Date)
  • Made Simple

    (Publisher)

  1. Essentials of a Valid Contract An agreement will be enforced when the following essential elements exist: (a) Offer and Acceptance. There must be an offer by one party and an acceptance of it by the other. (b) Intention to create legal relations. (c) Capacity of the parties. Each party must have the legal capacity to make the contract. (d) Consent must be genuine. The consent must not be obtained by fraud, or duress, for example. 112 The Law of Contract 113 (e) Consideration must be present (except in contracts under seal, i.e. by deed). (/) Legality of object. The object of the contract must not be one of which the law disapproves. (g) Possibility of performance. All the above elements must be present. If one or more is absent the contract will be (i) void, (ii) voidable, or (iii) unenforceable. Void Contracts are destitute of legal effect; that is, they are not contracts, and agreements of this kind do not confer legal rights on the parties thereto. For example, a contract by an infant to buy goods other than 'necessaries'. Similarly, if A agrees with B to break into C's house and steal if B pays A £10, the contract is void for it is illegal. Neither party can recover from the other on a void contract, but goods delivered may be recovered by an action in tort because no property (ownership) passes. Money paid under the agreement may be recovered in quasi-contract (see p. 189). Voidable contracts are those which may be made void at the instance of one of the parties. For example, a contract which is induced by fraud can be avoided by the party deceived. Unenforceable Contracts are those which are valid but are unenforce-able at law because of the absence of (i) evidence of the contract or (ii) the form required by law. For example, some contracts which are not 'evidenced in writing' are unenforceable at law. So, too, are contracts barred by the Limitation Act, 1980.

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  Law Made Simple

  • David Barker(Author)
  • 2014(Publication Date)
  • Routledge

    (Publisher)

  Held (by Lord Justice Birkett): that as the husband had not requested the wife to refrain from making an application to the court, there was no consideration for his promise moving from the wife. Therefore the action by the wife failed. “The principle in the High Trees House case must be used as a shield and not a sword.”

  It is not thought right that a man who has indicated that he is not going to insist on his strict legal rights, as a result of which the other party has altered his position, should be able at a minute's notice to insist upon his rights however inconvenient it may be to the other party's (Lord Cohen in Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd , 1955).

  7.6 Form

  We have already seen (p. 112 ) that unless contracts are valid, they may be classified as either void, voidable or unenforceable. A void contract is entirely without legal effect, does not give rise to any legal rights and duties, and is, in fact, no contract at all. A Voidable contract is one that may be repudiated at the will of one of the parties, but until it is so repudiated it remains valid and binding. It is affected by a flaw (e.g. fraud, innocent misrepresentation, undue influence or duress), and the presence of any one of these defects enables the person adversely affected to take steps to set the contract aside, subject to the interests of an innocent third party.

  Unenforceable contracts are neither void nor voidable, but they cannot be enforced in the courts because they lack some item of evidence essential to a valid contract. Some contracts must be made by deed, some must be in writing, and some must be evidenced by writing. Unless the writing (in the form laid down by law) is available, the courts will not lend their aid to the enforcement of the agreements. So they are stated to be unenforceable, but it does not mean that they are invalid. The purpose of these formal requirements is to achieve certainty and thus avoid disputes arising in the transfer of ownership or possession or rights in various kinds of property.

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  Beginning Business Law

  • Chris Monaghan(Author)
  • 2015(Publication Date)
  • Taylor & Francis

    (Publisher)

  The fourth requirement needed for there to be a legally enforceable contract is that both parties to the contract must have the capacity to contract. Children, those who are mentally incapacitated and those who are intoxicated do not have the capacity to contract. However, s.3(2) of the Sale of Goods Act 1979 states that where a person without capacity purchases goods then he must pay a reasonable price for them.

  Intention to create legal relations

  The final requirement is that the parties to a contract must intend to create legal relations. In Balfour v Balfour [1919] 2 KB 571 the court held that there was a presumption that where a married couple enter into an agreement they do not intend to make a legally enforceable contract. This applies to other agreements made in a domestic or family setting. Conversely, there is a presumption that in a commercial agreement there is an intention to create legal relations. Both presumptions can be rebutted.

  On-the-spot question

  ?

  Sarah, Snow Ltd’s managing director, has the authority to enter contracts on behalf of Snow Ltd. Sarah is at a trade conference and has just delivered a paper on modern business practice; as her paper went well, she decides to drink several large glasses of wine to celebrate. After finishing the wine Sarah bumps into the manager of a timber supplier who has a trade stand at the conference, and she agrees to purchase £189,000 worth of timber on Snow Ltd’s behalf.

  Discuss whether there is a legally binding contract.

  VITIATING FACTORS

  Key definition: Void

  Where a contract is void it is treated as if it never existed.

  Key definition: Voidable

  Where a contract is voidable it will continue to exist unless the innocent party is able to persuade the court to set the contract aside.

  A contract can be invalid where there is a vitiating factor present. It is important to note that depending on which factor is present the contract could be void, which is treated as if it never existed, or voidable, which means that the party seeking to set the contract aside must ask the court to avoid the contract. The court does not have to do this.

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  Contract Law in Russia

  • Maria Yefremova, Svetlana Yakovleva, Jane Henderson(Authors)
  • 2014(Publication Date)
  • Hart Publishing

    (Publisher)

  The important difference between a void contract and a contested contract (or, for example, contested terms within a contract) is that a void contract is invalid irrespective of any court action but a contested contract only becomes invalid when declared so by a court (CC article 166(1)). The situation with regard to void contracts is slightly complex. A contract is void when particular circumstances specified in law are present, irrespective of whether it has been deemed void by a court. The types of circumstances which render a contract void are discussed in detail below; they are such things as ille-gality, immoral purpose, lack of capacity, and similar. However, a party must apply to court and prove that the relevant legal grounds for invalidity are indeed present which make the contract void, otherwise they are unable to enforce the consequences of the contract’s invalidity. The concept of a contested contract has some similarity to the English con-cept of a Voidable contract; that is, that the contract exists until it is ‘avoided’, although in Russia, unlike in England, that step must be taken by a court. Thus if a contract under Russian law has been concluded and has not been contested by a party or other person with standing to contest it (discussed below), the contract remains in force. Property passes under the contract and can be passed to a third party, unless and until the contract is successfully contested. Again in contrast to English law, the right to contest such a contract is not extinguished when the property is passed to a third party but when the limitation period stipulated by law expires. In practice the difference between a contested and a void contract is as fol-lows. If a party to a contract considers a contract or particular term within it void, they can refuse to perform, referring to CC article 167(1) which provides that invalid contracts do not entail any legal consequences.

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  Contract Law For Dummies

  • Scott J. Burnham(Author)
  • 2011(Publication Date)
  • Wiley

    (Publisher)

  Provider: The person providing the benefit is due compensation for the value of that benefit. Even if the contract isn’t enforceable, the person who provided a necessity should get restitution for the reasonable value of the benefit.

  Recipient: The person who received the benefit is obligated to compensate the provider only for the value of the benefit and not necessarily for the amount agreed upon at contract formation. For example, if a hotel clerk takes advantage of a patron who’s drunk by selling a $100-a-night room for $1,000, the patron could claim that the contract to pay $1,000 was voidable, but he’d be liable in restitution for the reasonable value of $100.

  Child’s play? Making contracts with minors

  A minor, sometimes referred to in cases as an infant, is anyone under the age of 18 years. A minor is capable of entering into only Voidable contracts — contracts the minor can choose to get out of.

  Don’t consider contracts with minors void or unenforceable. Voidable contracts are presumed to be valid. A contract is ineffective only if the minor affirmatively and timely avoids it. The following rules apply to most contract cases involving a minor:

  The minor can avoid the contract at any time before he turns 18 or within a reasonable time thereafter.

  The minor can affirm (decide to stay in) the contract only after he turns 18.

  Only the minor has the power to avoid the contract. If a person over the age of 18 enters into a contract with a minor, that person can’t seek to avoid it on the grounds of the other party’s being a minor.

  Although all the states agree that minors may avoid their contracts, states disagree on many issues that arise in connection with the minor’s avoiding the contract, such as the following considerations:

  When a minor is considered emancipated (able to enter contracts in spite of being under the age of 18):

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