Written by: MAINAM HARSHINI
INTRODUCTION:
Firstly, A contract is an agreement between two parties that crates an obligation to perform or not to perform a particular duty.[i] There are five different types of contracts based on validity or enforceability of contracts. They are validity contract, void contract, voidable contract, illegal contract, and unenforceable contract.[ii]
DEFINITION:
According to Section 2(i) in The Indian Contract Act, 1872 An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract;
MEANING:
A voidable contract is also a Valid Contract. In a voidable contract, at least one of the parties must be bound to the terms of the contract. The other party is not bound and may choose to reject or accept the terms of the contract. If they so choose to reject the contract, the contract becomes void.
For example, suppose a person A agrees to pay a sum of Rs. 1,00,000 to a person B for an antique painting piece. This contract would be valid, the only problem is that person B is a minor and can not legally enter a contract. So, this contract is a valid contract from the point of view of A and a voidable contract from the point of view of B. If B becomes a major, he may or may not agree to the terms. So, this is a voidable contract.
Here, the other party is not bound and may choose to reject or accept the terms of the contract. If A or B choose to reject the contract, the contract becomes void. Otherwise, a voidable contract is a valid contract when B becomes major.
TERMS AND CONDITIONS:
Voidable contract is not void from the beginning. Whereas, it can be declared void by the court, if any of its parties wishes to reject the contract. Once the court declares it as a void contract, it will not have any legal implication. A voidable contract considered to be valid until no obligation or authority will arise from it. But, until this is done, the contract will be considered legal. It becomes void when court declares until then it will be considered valid and legal.
The Indian Contract Act, 1872 gives some circumstances when a contract can be voidable. According to section 10 of The Indian Contract Act, 1872 free consent is a necessity for a valid contract. Section 14 says that for a free consent these five things must be absent –
(1) Coercion
(2) undue influence
(3) Fraud
(4) misrepresentation, and
(5) mistake
If anyone of these five elements is present behind the consent, then such consent is not a valid consent and such contract is voidable as per section 19A of the said Act. Such a contract is voidable at the option of the parties whose consent obtain by such manner. It means only he can seek a declaration to make the contract void. These are five grounds for getting a contract to be declared as void. But these are under some important exceptions. For example, a party cannot avail a plea of fraud or misrepresentation, if:
1. he had an opportunity to find out the truth with due diligence
2. "Caveat emptor" is an admitted principle for a contract of sale and purchase. The meaning of this maxim is "the buyer should be beware". As it is not the duty of the seller to disclose all flaw of his goods, but it is the duty of the consumer to act carefully.
3. If he has not given his consent due to the alleged fraud or misrepresentation, though it was present there, then he cannot claim to be declared the said contract null and void based on fraud or misrepresentation.
VOIDABLE CONTRACT PROVISIONS ACCORDING TO THE INDIAN CONTRACT ACT
1. Voidability of agreements without free consent: When consent to an agreement is caused by coercion, fraud, or misrepresentation the agreement is voidable at the option of the party whose consent was so caused.[iii] But, A party to a contract (made by fraud or misrepresentation), if he wants to it, he can claim that contract.
2. Power to set aside contract induced by under influence: When consent to an agreement is caused by under influence, the agreement is a contract voidable at the option of the party whose consent was so produced.[iv] Here, under influence mean one of the parties will dominate the other party in entering the contract. Ex: A uses gun and threaten B to sign the contract that the land of B belongs to A. If B signs also the contract is voidable as it is made under influence of A. Here, A bound to prove that he did not used influence.
3. Liability of a party preventing event on which contract is to take effect: When a contract contains reciprocal promises and one party to contract prevents the other party from performing his promise, the contract becomes voidable at the option of the party so prevented.[v] Ex: A and B contract is that A will provide 100 rice packets when B pays for it first. Agrees to give but B is not giving money. Then, the contract is voidable in the view of A.
4. Effect of failure to perform contract at fixed time: When time is essence of the contract and the party fails to perform it in time, then contract is voidable at the position of the other party.[vi] Ex: If A contracts with B that B should paint the art in 1 month for presenting it in art exhibition. If B fails to complete it in 1 month then the contract is voidable in the point of A.
5. Consequences of cancellation of voidable contract: When a person at whose option a contract is voidable cancels it, the other party thereto need not to perform any promise therein contained in which he is promiser. The party cancelling a voidable contract shall, if he has received any benefit there under from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received.[vii]
6. Mode of communicating or cancellation of voidable contract: the cancellation of a voidable contract may be communicated or cancelled in the same manner, and subjected to the same rules, as apply to the communication or cancellation of a proposal.
CONCLUSION:
I conclude that we come across these types of contracts in our daily life. If we know all these rules, we can resolve the problems on our own and can prevent the discrepancies while entering in a contract. Mostly some contracts are not only made legally but by our words, promises, or by other means. So, knowing of law of contracts will be helpful this is not only essential for lawyers may be useful for common man.
[i] Contract definition, Legal Information Institute, Cornell Law School, https://www.law.cornell.edu. [ii] Indian Contract Act 1872, Types of contracts, Toppr website, https://www.toppr.com. [iii] The Indian Contract Act, 1872, s.19 [iv] The Indian Contract Act, 1872, s.19A [v] The Indian Contract Act, 1872, s.53 [vi] The Indian Contract Act, 1872, s.55 [vii] The Indian Contract Act, 1872, s.64
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