Valid, void, or voidable contracts

There is often a lot of legalese that is involved in contracts and other legal documents. A number of times when disputes arise that is when the terminology usually arise.

In the past article I did an article where I emphasised the importance of familiarising yourself with some of the legal terms, and also some Latin terms often used in agreements, and even in Court judgments.

This week we are going to look at some terminologies that you will find in the contact law, Valid, Void and Voidable contracts.

When entering into a contract you must pay attention to elements of a contract that are linked to the “validity” or “voidability” of a contract. What do these terms mean?

What constitutes a valid contract?

A contract is a legally enforceable agreement. That definition is important as it brings a fundamental issue of “legality”. A contract has to comply with the provisions of the law for it to be enforceable. In other words, it has to be a legal agreement.

An agreement that violates the law is deemed to be illegal, void and unenforceable. There are no rights that ensue from an illegal agreement. The duty of the Court is to uphold the law.

The key phrase is “lawful agreement”. This means you can satisfy all the other elements, but if your agreement is illegal, it is unenforceable.

Many corporates usually find themselves in difficult times after entering into agreements that are illegal.

You need to ensure that your legal team properly advises you before entering into any agreement. This can save you lots of resources in the long run.

What is the source of illegality? This is the question that comes to mind quickly. Illegality comes in two forms

Statutory illegality – This is caused by contravention of a statute (statutory illegality), and
Common law illegality – This is caused by contravention of the common law (common law illegality).

Elements of a valid contract

What makes a contract valid is its compliance with the requirements in terms of the law for a valid contract. A valid contract is an agreement that has been concluded satisfying all of the peremptory requirements for a valid contract: consensus, certainty, offer and acceptance, possibility, legality, capacity and formalities.

J.T.R Gibson gives a detailed definition of what a contract is; “A contract is a lawful agreement, made by two or more persons within the limits of their contractual capacity, with the serious intention of creating a legal obligation, communicating such intention, without vagueness, each to the other and being of the same mind as to the subject – matter, to perform positive or negative acts which are possible of performance.” (Emphasis is mine).

The requirements set out are required to have been met in order for there to be a valid contract. In the absence of compliance with these requirements, it means that there is no valid contract between the parties. This has a serious effect on the enforceability of the contractual terms between the parties.

Should these requirements not be met, it would mean that a valid contract was not concluded, which will affect the enforceability of the contractual terms between the parties.

The point has been made regarding the question of legality. Contractual terms contained in an agreement not be in contravention with any existing laws, be it existent under the common law or in legislation. In Sasfin (Pty) Ltd v Beukes1989 (1) SA 1(A) a principle was established and it is of application in this jurisdiction that contracts which are against public policy will not be enforceable.

What is a voidable or void contract?

Whether or not a contract is voidable is linked to the requirements for concluding a valid contract. A void contract is one that is unenforceable because it lacks at least one of the essential elements of a valid contract. Such a contract does not create any rights and duties (Dr. I. Maja). It is unenforceable from inception (void ab initio). This is the direct opposite of a valid contract.

A voidable contract on the other hand refers to an agreement which may be rendered unenforceable due to circumstances which have undermined a requirement or requirements for a valid contract.

In other words, a voidable contract has all the essential elements but consensus was obtained in an improper manner through misrepresentation, duress, undue influence, mistake or bribery of an agent.

The innocent party has a choice to either uphold it or set it aside (Dr. Maja). The question that arises is what are the available legal remedies for the innocent party. We will look at these in the following articles.

LEGAL DISCLAIMER: The material contained in this post is set out in good faith for general guidance in the spirit of raising legal awareness on topical interests that affect most people on a daily basis. They are not meant to create an attorney-client relationship or constitute solicitation. No liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the post. Laws and regulations are complex and liable to change, and readers should check the current position with the relevant authorities before making personal arrangements.

Arthur Marara is a corporate law attorney practicing law in Harare, Zimbabwe. He is also a notary public and conveyancer. He is also passionate about employment law, commercial law, family law and promoting legal awareness and access to justice. He writes in his personal capacity. You can follow him on social media (Facebook Attorney Arthur Marara), or WhatsApp him on +263780055152 or email attorneyarthurmarara@gmail.com.-ebusinessweekly