Void contracts
Void contracts

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Void contracts
  • When is a contract a void contract?
  • Distinguishing between contracts which are void, voidable or unenforceable
  • Void contract
  • Voidable contract
  • Unenforceable contract
  • When is a contract void—common mistake
  • Sale of thing that has ceased to exist at time of contract
  • Sale of non-existent goods
  • Mistake as to quality v mistake as to substance
  • More...

When is a contract a void contract?

A void contract is one that is wholly lacking in legal effect. A contract will be void where:

  1. the parties contract on the basis of a fundamental common mistake

  2. one party contracts on mistaken terms and the other party knows of the mistake

  3. one party is mistaken as to the other party’s identity

  4. a party executes a document under a fundamental misapprehension as to its nature (non est factum)

  5. a statute provides for a contract to be avoided

Distinguishing between contracts which are void, voidable or unenforceable

A contract that is void must be distinguished from one that is merely voidable and one that is unenforceable.

The distinction between a void contract and a voidable contract is especially significant in the context of third party rights. A third party will not be able to acquire rights under a void contract. However, where a contract is merely voidable and the person entitled to avoid the contract has not exercised their right to do so, the third party will acquire rights.

Void contract

To speak of a void contract is a contradiction in terms because if a contract is truly void it is not a contract at all.

A contract that is void produces no legal relationship between the parties. The contract is said to be void ab initio, meaning any payments made or property transferred

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