Void agreements are those agreements which are not enforced by law courts. Legally, a void agreement means the contract or agreement is no longer enforceable. A voidable agreement is a formal agreement between two parties that may be rendered, unenforceable for a number of legal reasons. The following are the points of difference between the two.
Void agreement: The type of contract which cannot be enforceable is known as a void contract.
- Enforceability: A void agreement is unenforceable at law.
- Defects: A void agreement is void ab-initio and its defects cannot be removed.
- Rights of Third Party: In a void agreement a third party does not acquire any rights.
- Compensation: In a void agreement the person is not entitled to compensation for loss arising due to the non-performance of the agreement.
- Collateral Agreement: A collateral agreement to void agreement is a void contract.
- Lapse of Time: It can never become a void contract on the expiry of reasonable time.
- Free Consent: It is void due to lack of any essentials of a valid contract except free consent.
Voidable Contract: The contract in which one of the two parties has the option to enforce or rescind it, is known as a voidable contract.
- A voidable contract is a valid contract until it is rejected.
- A voidable contract is not void ab-initio and its defects can be removed.
- In a voidable contract, a third party who buys goods in good faith and for consideration before the contract is rejected acquires rights.
- In a voidable contract, a person is entitled to compensation for loss arising due to non-performance of the contract.
- A collateral agreement to a voidable contract is not a void contract.
- It may become a valid contract if the aggrieved party does not reject it within a reasonable time.
- It is voidable because the consent of a party is not free.