Types of Contracts and Agreements Based on Validity

Contracts and agreements play a crucial role in our everyday lives. From buying a car to renting an apartment, we often enter into various agreements. But have you ever wondered if all agreements are valid and enforceable? Let’s explore the different categories of validity to shed light on this matter.

Valid Contract

A valid contract is like a strong foundation. It has all the necessary elements and is enforceable by law. Think of it as a fair and binding agreement between two or more parties. 

For a contract to be valid, it must include important aspects such as an offer, acceptance, consideration (something of value exchanged between parties) and a legal purpose. 

When all essential elements of contract are present, the contract becomes legally binding and the parties involved must fulfil their obligations. 

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For example, when you agree to buy a car from someone for an agreed-upon price and both parties willingly enter into the agreement, it becomes a valid contract.

Void Agreement

Sometimes, an agreement may lack one or more essential elements, making it unenforceable by law. We call this a void agreement. It’s like a house without a solid foundation – it cannot stand. 

A void agreement lacks legality right from the start. It may occur when the subject matter of the agreement is illegal or impossible or when parties do not have the legal capacity to enter into a contract. 

For instance, if you make an agreement to buy something illegal, like stolen goods, that agreement would be considered void.

Voidable Contract

A voidable contract is one that starts as a valid contract but can be cancelled or voided by one or both parties due to specific legal reasons. It’s like a contract with a possible exit door. The law allows parties to reconsider their agreement under certain circumstances. 

This could happen when there is misrepresentation, fraud, duress or undue influence involved. For example, if you buy a product based on false information provided by the seller, you may have the right to void the contract.

Illegal Agreement

Lastly, an illegal agreement is one that goes against the law or public policy. It’s like building a house on forbidden land – it’s not allowed. These agreements have no legal validity and cannot be enforced by law. 

Engaging in illegal activities or agreeing to do something illegal are examples of illegal agreements. They are considered void from the beginning because the law cannot support or uphold actions that are against its principles.

Here’s a table explaining the validity of contracts and agreements:

ValidityDefinitionExample
Valid ContractA contract that meets all the essential elements and is enforceable by lawA agrees to sell a car to B for a specified price, and both parties willingly enter into the agreement with consideration
Void AgreementAn agreement that lacks one or more essential elements and is not enforceable by lawA agrees to sell a car to B which is destroyed at the time of agreement.  The subject matter of the agreement is mpossible.
Voidable ContractA contract that is initially valid but can be voided or canceled by one or both parties due to certain legal groundsA enters into a contract with B, but A later discovers that B misrepresented important information
Illegal AgreementAn agreement that violates the law or public policy and is not enforceable by lawA and B enter into an agreement to engage in illegal activities such as drug trafficking

In a valid contract, all the necessary elements are present, and it is legally binding. A void agreement lacks essential elements, making it unenforceable. A voidable contract, although initially valid, can be voided due to specific legal reasons. An illegal agreement, as the name suggests, involves actions or terms that are against the law and cannot be enforced.

Note: Access complete CLAT Legal Reasoning notes here.


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Aishwarya Agrawal
Aishwarya Agrawal

Aishwarya is a gold medalist from Hidayatullah National Law University (2015-2020) and has over 9 years of experience in law. She has been mentoring law aspirants to help them secure admission to their dream colleges and universities.

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