An agreement enforceable at law is a contract. Contracts can be classified differently as Valid Contracts, Void Contracts, Voidable Contracts And Unenforceable Contracts. But what are the differences among them?
Lets have a keen look on the basic differences among Valid Contracts, Void Contracts, Voidable Contracts And Unenforceable Contracts.
Difference Between Valid, Void and Voidable And Unenforceable Contracts
Valid contracts: Contracts which are free from any defect and enforceable at law of court at any time is a valid contract.
Void Contracts: Void contracts are those which are not contracts at all. They are destitute of any legal effect. They cannot be brought in a court of law for any action. Examples are gaming and wagering contracts. These are not necessarily illegal contracts. It should be remembered that all illegal contracts are void, but all void contracts are not necessarily illegal in insurance contracts. An example of void contract may be affecting an insurance policy by concealment or fraudulent misrepresentation or an insurance contract not supported by insurable interest.
Voidable contracts: Voidable contracts are those where minor breaches exist, e.g., breach of the duty of utmost good faith. In such circumstances it is the option of the aggrieved party to decide whether the contract is to be treated as valid. If the aggrieved party so decides then the contract becomes a good valid enforceable contract. If the decision is otherwise, then the contract becomes void. Therefore, it can be said that a voidable contract shall remain valid until it is declared void by the party who has suffered as a result of the breach.
Unenforceable contracts: Unenforceable contracts are those which are very much valid contracts, but simply cannot be enforced in a court of law because of the absence of some essential legal requirements or evidential features. Stamp Act requires that insurance policies are to be appropriately stamped. If, therefore, a policy is not stamped, then even though the contract will be valid but such a policy cannot be produced in a court of law as evidence to the contract.
