Understanding the difference between a void agreement and a void contract is crucial to avoiding legal risks in business transactions. These terms are often used interchangeably but have distinct differences that should be understood.
A void agreement is one that is not enforceable by law from the beginning. It is essentially an agreement that does not exist in the eyes of the law. Such agreements are not legally binding and do not create any legal obligations for the parties involved. For example, an agreement to commit a crime is considered void from the start and cannot be enforced in court.
On the other hand, a void contract is one that is initially valid but becomes unenforceable later. It is a contract that is deemed to be legally binding when it is created, but due to some legal defect, it becomes unenforceable. A void contract is not typically worth the paper it`s written upon, and it cannot be enforced in court. Examples of void contracts include agreements made by minors or persons of unsound mind, and those made under duress or undue influence.
It`s important to note that a void contract is different from a voidable contract. A voidable contract is one that is legally binding but can be canceled by one or both parties due to a mistake, fraud, or other legal issue. In contrast, a void contract is unenforceable from the beginning and cannot be corrected by either party.
In conclusion, understanding the difference between a void agreement and a void contract is crucial to avoiding legal issues. A void agreement is one that is not enforceable from the start and does not create legal obligations, while a void contract is initially valid but becomes unenforceable later due to a legal defect. It`s essential to work with legal professionals to avoid creating void agreements and to ensure that any contracts entered into are legally binding and enforceable.