Dr. R.A.N.M ARTS AND SCIENCE COLLEGE�Affiliated to Bharathiar University , �Accredited with “ B+” NAAC�
Mrs. N. Geetha M.Com(CA).,� Assistant Professor,�Department of Commerce (CA)
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Course Name : Commercial Law
�Welcome You All
CLASSIFICATION ACCORDING TO VALIDITY�
From the point of view of validity, a contract is classified as follows
Valid Contract (section 2 (h) �
According section 2(h) contract is an agreement enforceable by law. All contracts are agreements but not vice versa. The formation of the contract requires certain important ingredient without which the contract cannot be constituted. An agreement becomes a valid contract when all the following essential elements are present. If any one of these elements is missing, the contract is voidable, void, illegal or unenforceable.
The word ‘void’ means ‘not binding in law’. Accordingly, the term ‘void contract’ implies, contract which has no legal effect at all. A void contract is that which is not enforceable by law. Sec. 2 (j) defines: “A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”. A contract which is enforceable by law at the time it was made. But later on, if it becomes legally unenforceable due to some reasons, it is called void contract.
Void contract
According to section2 (i)“An agreement which is enforceable by law at the option of one or more of the parties thereon, but not at the option of the other or others, is a voidable contract”. A voidable contract is one which is enforceable by law at the option of one of the parties, until it is avoided or rescinded by the party entitled to do so by exercising his option in that behalf, it is a valid contract.
Voidable Contract
The unenforceable contracts are those which cannot be enforced in a Court of Law because of some technical defects such as absence of writing, registration, requisite stamp etc., If such formalities are not properly observed, the contract cannot be enforced is court of law. Such contracts can be enforced if the technical defect is removed.
Unenforceable contract
According to section 2 (g), “An agreement not enforceable by law is said to be void”. There is absence of one or more elements of a valid contract, except that of ‘free consent’ in the case of a void agreement. A void agreement has no legal effect. It confers no rights on any person and creates no obligations. Example: An agreement with a minor is void ab-initio as against him, because a minor lacks the capacity to contract. Similarly, an agreement without consideration is void ab-initio
Void Agreement
An agreement is illegal and void if its object or consideration: (a) is forbidden by law; or (b) is of such a nature that, if permitted, it would defeat the provisions of any law;or (c) is fraudulent; or (d) involves or implies injury to the person or property of another; or (e) the court regards it as immoral, or opposed to public policy (Sec. 23).Thus, an agreement to commit murder, robbery etc.
Illegal Agreement