VALID, VOID & VOIDABLE CONTRACTS, MOST IMPORTANT QUESTIONS FOR CJ EXAM PUNJAB

call 03244406608 to join new session starting from 1st January 2024 Short Notes Valid, Void, Voidable Agreements Introduction 1. Valid contract:- An agreement between two or more competent parties in which an offer is made and accepted, and each party benefits. This term, in its more extensive sense, includes every description of agreement, or obligation, whereby one party becomes bound to another to pay a sum of money, or to do or omit to do a certain act; or, a contract is an act, which contains a perfect obligation. In its more confined sense, it is an agreement between two or more persons, concerning something to be, done, whereby both parties are bound to each other, or one is bound to the other. 2. Definition of contract:- (ii) John Salmond (1862-1924):- "A contract is an agreement creating & defining obligations between the parties". (iii) Statutory Definition:- Section 2(h) Of the Contract Act, 1872 "An agreement enforceable by law is a contract". 3. Oral Contract Oral contract is not excluded under section 10 from being enforced, although in case of oral contract, clearest and more satisfactory evidence would be demanded by Court. PLD 2009 Lah. 518 (DB) Valid Contract  A valid agreement is a contract, which is binding and enforceable. In a valid contract, all the parties are legally bound to perform the contract.  Section 10 of the Contract Act states that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Essentials of a Valid Contract  Offer and Acceptance o All offers must be valid and once accepted, it binds both the parties into a valid agreement.  Legal relationship o Parties to a contract must desire to constitute a legal relationship. It results when the parties know that if any one of them fails to fulfil his/her part of the promise, he/she will be liable for the failure of the contract. Agreement, by which parties did not intend to create any legal obligation, would not be enforceable in law. PLD 2008 SC 146  Lawful consideration o Consideration is described as something in return. It is also vital for the validity of the contract. A promise to do something or to provide something without anything in return will not be enforceable by law and, therefore, will not be valid.  Competency of parties o The parties to an agreement should be capable of contracting. In other words, they should be capable of entering into the contract.  Free consent o Another essential of the valid contract is the consent of the parties, which should be free. o The consent is considered free when any of the following things do not induce it: • Coercion • Misrepresentation • Fraud • Undue influence • Mistake  Lawful objects o According to the Contract act, an agreement may become a valid contract only if it is for a lawful consideration and lawful object. Void Agreements/ Contracts (i) "Void Contracts" A “void contract” is one where the whole transaction is regarded as a nullity. It means that at no time has there been a contract between the parties. Any goods or money obtained under the agreement must be returned. Where items have been resold to a third party, they may be recovered by the original owner.  Relevant Provisions: Section 24-30-C of the Contract Act, 1872  Void Agreements are not contracts.  In most cases, a void agreement misses one or more essential elements that would make it valid. Because it's not an actual contract, neither party to it must do anything to terminate it.  It's not legally enforceable and imposes no obligations on the parties.  It fails to create legal rights and is against the law.  There are some agreements which have been expressly declared as void by the Contract Act They are: o Agreements in which consent is caused by mistake. o Agreements of which the consideration or object is unlawful. o Agreements without consideration. o Agreements in restraint of marriage and in restraint of trade. o Agreements in restraint of legal proceedings. o Agreements which are uncertain and ambiguous. o Agreements by way of wager. o Agreements to do impossible acts. Voidable Contracts  Voidable agreements have the necessary elements to be enforceable, so they appear to be valid. However, they also have some kind of flaw that makes it possible for one or both parties to void it.  A voidable contract may start out being legally binding but become void. It's still considered valid if an injured party doesn't take action.  The primary difference between void and voidable contracts is that a void contract can't be legally performed, while a voidable agreement can still be performed, as long as the unbound party doesn't void it prior to performance.  One or both parties have the option to enforce it.  A party that's been defrauded, coerced, or misled into signing the contract can object to its validity.