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DIFFERENCE BETWEEN VOID AND VOIDABLE CONTRACT

The definition of Fraud is given under Section17 of Indian Contract Act. It says that ‘Fraud” means and includes any of the following acts committed by the party to a contract, or with the connivance or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract. Section 39- This section says that if one of the parties to a contract has restrained himself entirely from performing the contract, the promise can end the contract unless he signifies implicitly or explicitly his willingness to continue.

• Coercion, undue influence, fraud or misrepresentation and other factors may impact the consent of the concerned party, giving birth to the right.
• In another case when a misrepresents be cross examine the fact and finds that 500 kg of wheat is not produced in the factory instead only 400 kg are produced.
• When two parties who have accepted each others promise and have provided the adequate consideration the promise turns into an agreement.
• Where appropriate, users should seek their own legal or other professional advice.

These types of contracts are covered under section 19 and section 19 of the ICA. Section 19 covers those type of agreements that are entered by the ways of coercion, fraud and misrepresentation. It says that if the party whose consent has been caused by fraud or misrepresentation wants the contract to go on then he shall be put in the position in which he would have been in if the misrepresentation made to him had been true. A unilateral promise is a promise from one side only and is intended to induce some action by the other party. The promisee is not bound to act, for he gives no promise from his side. But if he carries out the act desired by the promisor, he can hold the promisor of his promise.

Smith v Land & House Property Corp ( Citation: 28 Ch D 7

The terms void and voidable are frequently misunderstood and used interchangeably. While there are some parallels between void and voidable contracts, there are significant distinctions that must be understood. The most underlined difference between void agreement and voidable contract is that void contracts are those which are unenforceable by law, whereas voidable contracts are those that are enforceable at the option of a party to the contract. This article aims to highlight other significant differences and define the kinds of contracts which are void, and those which are voidable. It was however clarified, providing few examples, that such cases would be few and isolated.

In English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free. The Indian Contract Act defines voidability to its ultimate extent and it is observed to be well fitted to protect the rights and interests of the people on a large scale.

Meaning and Definition of Voidable Contract

Agreement in Restraint of Marriage – Any kind of agreement which restrains the marriage of an adult, is a void agreement. One or both of the parties cannot enter into a contract legally. Voidable agreements void contract vs voidable contract are defined under Section 2 of the Indian Contract Act as those agreements which are only enforceable at the option of one or more of the parties to such agreement and not at the option of others.

Although the statement promised of intent the court held that it was found that the defendants had no intention of maintaining or keeping of such an intent at the time, they had made the statement. Under this case it was held that there is an assumption made by the court against the intention to create a legally enforceable agreement in circumstance where the agreement is enforceable in nature. A promises to pay 10,000 rupees at the end of six months, if C, who owes that sum to B, fails to pay it, B promises to grant time to C accordingly. Here, the promises of each party is the consideration for the promises of the other party, and they are lawful considerations. A, being entitled to an estate of the life of B, agrees to sell it to C, B was dead at the time of the agreement, but both parties were ignorant of the fact. A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay.

Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake. The Court permitted arbitration to proceed simultaneously along with criminal proceedings. Defence that the decision of the criminal proceedings, in respect of corrupt practices, should be awaited before the arbitral tribunal is constituted, was hence rejected.

Validity of a contract, voidable contract and void agreement as given under Indian Contract Act, 1872

It is very important to know that without any knowledge about the voidable contract, you cannot get rid of it ultimately. This answers question no.4 proving that the deprived or soon-to-be deprived can sue to render a contract voidable and after the discretion of the court can be rewarded compensation. Hence, voidable contracts entail various prospects and are reasonably flexible. The sec encourages the fact of voidable contracts seen from a wider perspective entailing a wide scope.

Let us discuss the conditions on which a contract can be declared void or be voidable and every contract should not follow all these elements. The main issue of this case was whether a statement of opinion can hold the contract voidable owing to the fact that it was done by misrepresentation. The seller was aware of the fact that sale is done for sheep-farming. He was of the opinion that the land is suitable to occupy 2000 sheep. The land in turn came out to be not useful for this purpose. The purchaser pleaded misrepresentation and refused to pay the prize.

A contract is regarded as voidable when it is entered into without the parties’ free consent. A voidable contract is enforceable by law at the option of one or more parties but not at the option of the other parties, according to the Act’s description. If the aggrieved party does not rescind the contract within a reasonable time, it may be declared valid. Thus, if the parties purport to agree to do something which is obviously impossible it is deemed to be a case in which they are not interested in performing their respective obligations or they do not understand at all as to what they are agreeing for.

The contract is voidable at B’s discretion and if he chooses to do so, he is entitled to reimbursement from A for any losses he has suffered as a result of its non-performance. Under Section 19A of the Indian Contract Act, 1872, an agreement induced by undue influence is voidable at the option of that party whose consent was taken by influencing him/her. Performance of such agreements may be avoided absolutely or on prescribing certain terms and conditions. If you have a little bit of time, just stay on the page as today, this article will make you know about voidable contracts and their related things. Section 2 states that an agreement that is not enforceable by law would amount to a void contract. Another, When A and B contract to execute certain work an agrees to work for 1000 rupees.

MERGERS AND ACQUISITIONS: AN OVERVIEW OF THE LEGAL FRAMEWORK UNDER COMPANIES ACT 1956

The defendant entered into an agreement with the claimant for the lease of a property for a term of three years. The claimant intended to reside in the property with his family. The property concerned was in an extremely poor structural condition and was likely to collapse at any stage. Ultimately, a large part of the property collapsed and the claimant sought to rescind the contract, or alternatively commence action in tort for his losses.

The court gave the rationale that if the false representation is made believing that the statement to be true it would not amount to fraud. A contract that restricts a party’s right to a legal remedy or limits the amount of time a right can be enforced in a court of law is void. The only exception is that the parties may include an arbitration clause to send existing or future conflicts to arbitration. He afterward entered into an agreement with another manufacturer of guns and ammunition and the company brought an action to restrain him. It was held that the first part of the agreement was valid, being reasonably necessary for the protection of the purchaser’s interest.

RESIDUAL METHOD OF VALUATION FOR LAND, PROPERTY & DEVELOPMENT APPRAISALS

In this case the insured had undergone an operation of thyroid. He had a major operation four years before the date he took insurance policy. He did not disclose this fact while obtaining the insurance policy. He took policy on 6th July 1987 and within six month on 21st February 1987 he died. The court held that insured did not disclose all material facts of contract so it is amounts to fraud.

This is a case where the buyer’s consent was void due to the seller’s deception. A contract can also be voidable if a contractual party’s permission has been revoked. Consent to be vitiated indicates that a contractual party induced a party to sign a contract despite the fact that that party would not have signed if complete and truthful information had been communicated prior to the completion of the transaction.

Therefore, the case helped in understanding the overlapping relationship between fraud and misrepresentation under the Indian Contract Act, 1872, both of which contribute to rendering a contract voidable at the option of one of the parties to the same. The Madras High Court while deciding on the case of Kopparthi Venkataratnam And Anr. Take, for instance, A, while onboard an English ship on the high seas, coerces B into signing a contract by criminal intimidation as defined by the Indian Penal Code, 1860. A used coercion, despite the fact that his act was not illegal under English law and that Section 506 of the Indian Penal Code, 1860 was not in effect at the time or location of the act. Therefore, in this case, the contract will be voidable at the option of B, and the presence or absence of the Indian Penal Code, 1860 will render no effect.

Suppose if it is to be done that ‘A’ threatens ‘B’ to enter into a contract for selling a piece of land to ‘A’ at Rs. 1. Here the contract is voidable from B and B can go to choose either selling the land to A at the agreed price or https://1investing.in/ B can come to avoid the contract approaching a court. The Court of Appeal held that the statement of intention was a press release of fact and amounted to a misrepresentation which the plaintiff was entitled to rescind the contract.

The author would like to point out Section 25 of the Act as well. Thus, agreement without consideration is held to be void agreement and not void ab initio. One of the ingredients of a valid contract is lawful consideration and not adequate consideration, the law recognises, with certain conditions, an agreement without consideration is a contract. But when an agreement the object and consideration of which is opposed to the law of the land, it is held to be void . Hence to determine whether a contract is valid or void or voidable the conditions under Sec 10 play a very important role.