PrepAgent.com - Valid, Void, and Voidable | Real Estate Exam (2024)

FAQs

What is an example of a valid, void, and voidable contract? ›

Suppose a person A agrees to pay a sum of Rs. 10,0000 to a person B for an antique chair. This contract would be valid, the only problem is that person B is a minor and can't legally enter a contract. So this contract is a valid contract from the point of view of A and a “voidable” contract from the point of view of B.

Void contracts don't give anyone an option, they are invalid no matter what the parties do. Voidable contracts are valid until one of the parties decides to cancel or revoke them for legal reasons.

A void contract is a promise that the law won't enforce. Imagine a person who isn't the actual owner of a property trying to sell a property they don't own. If someone tries to sell a house they don't own, that's likely an example of a void contract. In these cases, the law assumes that the contract never existed.

A voidable contract is a contract where one party has the ability to void the contract if they desire. An example of a voidable contract would be a contract with a minor. A minor can enter a contract but later choose to get out of it. The other party cannot enforce it against a minor once they choose to void it.

A common mistake is the circ*mstance where all parties to a contract are “mistaken” regarding a fundamental matter of fact. If both parties are under the same misapprehension (e.g. the existence of goods under a sale of contract) it may render the contract void at law or, in some circ*mstances, voidable in equity.

These factors include uncertainty, incompleteness, mistakes, lack of capacity, illegality, and whether the contract breaches public policy. By avoiding these six mistakes, you can avoid having a void contract.

A contract may also be voidable if one of the parties was not legally qualified to participate; for example, if one party was a minor at the time of signing. This is different from a void contract. A voidable contract is legal until one of the parties seeks to challenge, cancel, or amend it on qualified legal grounds.

What is an example of a valid agreement? ›

John offered to sell his car to Mary, and Mary accepted the offer. They both agreed on the price, delivery time, and payment method, which represents consideration. Both parties are legally capable of entering into the contract, and they intend to create legal relations by signing the agreement.

A valid contract is one that meets the basic elements of contract law. For example, you sign to buy a blue house, and the house is blue; thus the contract is valid.

Without valid consideration, a contract may be deemed unenforceable, as it lacks a necessary element to make it legally binding. The enforceability of a residential real estate contract hinges on a careful consideration of various elements.

It is a legal framework for the agreement between the parties, which is both certain and enforceable. However, to be legally binding, a contract must include four key elements: an offer, acceptance, consideration, and an intention to create legal relations.

An agreement is made when two parties agree to something. So, for example, a mother might make an agreement with her son not to kiss him in public because, after kindergarten, well, that's just not cool. If people's opinions are in accord, or match one another, then they are in agreement.

Examples of Valid Contract:

Example 1: Party A agrees to sell Rice crops to Party B. Both parties agree that Party A can cut the crops and take them, once he pays the agreed price. Every kind of movable property is good except for cash and actionable claims.

Void Contract Example: Forced Consent

Contracts entered into under these circ*mstances are considered void, as the consent required for a valid contract is lacking. Suppose Party A enters into a contract to sell their car to Party B. However, Party B threatens physical harm to Party A if they do not agree to the sale.

(a) A engages B to murder C and borrows Rs 5,000 from D to pay B. B is aware of the purpose of the loan. Here the agreement between A and B is illegal and the agreement between A and D is collateral to an illegal agreement. As such the loan transaction is illegal and void and D cannot recover the money.