Void agreement

“An agreement not enforceable by law is said to be void” [sec.2 (g)]. Thus, a void agreement does not give rise to any legal consequences and is void agreement does not give rise to any legal consequences and is void ab-initio. In the eye of law such an agreement is no agreement at all from its very inception. There is absence of one or more essential elements of a valid contract, except that of ‘free consent,’ in the case of a void agreement. Thus, an agreement with a minor is void abinitio as against him, because a minor lacks the capacity to contract. Similarly, an agreement without consideration is void ab-initio, of course with certain exceptions as laid down in section 25. Certain agreements have been expressly declared void in the contract act e.g., agreements which are in restraint of trade or of marriage or of legal proceedings or which are by way or wager.

A ‘void’ agreement should be distinguished from a ‘void contract’. A ‘void agreement ‘ never amounts to a contract as it is void ab-initio. A ‘void contract’ is valid when it is entered into, but subsequent to its formation something happens which makes it unenforceable by law, notice that a contract cannot be void ab-initio and only an agreement can be void abinitio.

Obligation of person who has received advantage under void agreement or contract that becomes void. In this connection section 65 lays down that when an agreement is discovered to
be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it. Thus, this section provides for restitution of the benefit received. Thus both parties may stand uneffected by the transaction in the following two cases.

(a) When an agreement is discovered to be void. In other words, when an agreement is void being discovered at a later stage. For example, A pays B Rs. 1,000 for B’s agreeing to sell his horse to him. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. In this case the agreement is discovered to be void and B must repay to A Rs. 1,000. it should, however, be noted that agreements which are known to be
void or illegal, when they are entered into, are excluded from the purview of this section. Thus, if L pays Rs. 10,000 to M to murder Z, the money cannot be recovered. Similarly, nothing can be recovered in the case of expressly declared void agreements, of course, subject to the following exceptions.

  • (i) In the case of an agreement caused by bilateral mistake of essential fact (although it is expressly declared void under section 20) restitution is allowed as it comes under the category of ‘an agreement discovered to be void.’
  • (ii) In the case of an agreement with a minor who commits fraud by misrepresenting his age (although agreement with a minor is known to be void.) restoration is allowed in specie on equitable grounds because a minor cannot be allowed to cheat people, and also because the other party has not lost his title to the thing in question.

(b) When a contract becomes void, restitution is also allowed in the case of a void contract. For example, A agrees to sell B after one month 10 quintals of wheat at Rs. 625 per quintal and receives Rs. 500 as advance. Soon after the contract, private sales of wheat becomes void but A must return the sum of Rs. 500 to B. Similarly, where after accepting Rs. 1,000 as advance for singing at a convert for B, A is too ill to sing. A is not bound to make compensation to B for the loss of the profits which B would have made if A would have been able to sing, but A must refund to B the 1,000 rupees paid in advance.