Void and Voidable Contracts in Nepal
Void and Voidable Contract
17/11/2013
INTRODUCTION
A contract is an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration. It is a voluntary, deliberate and legally binding agreement which becomes legally valid if meeting of minds exists between the contracting parties and establishment of a legal relation/obligation between the parties for a legal consideration and which must contain a lawful object. Contract Act
2000 AD/2056 BS defines contract as “an agreement enforceable by law, concluded by two or more parties for performing or not performing any task.” The existence of a contract requires finding the following factual elements:
•
an offer
•
an acceptance of that offer which results in a meeting of the minds
•
a promise to perform
•
a valuable consideration (which can be a promise or payment in some form)
•
a time or event when performance must be made (meet commitments)
•
terms and conditions for performance, including fulfilling promises
•
performance.
VOID AND VOIDABLE CONTRACT
If the required elements of a valid contract are not implied then the contract is either a void contract or a voidable contract.
Void Contract
A void contract is an agreement which is not recognized by the law. Contract will be deemed void on the following circumstances as per the Contract Act, 2056 (2000), Clause No. 13:
1. A contract that restricts anyone from engaging in any occupation, trade, public facilities etc that is not prohibited by the law. However, contract shall not be considered void under certain exceptions. When a contract is among partners in a partnership firm then it may contain certain restriction in activities which may prevent any of the partners involved in the firm from engaging in any trade or business which is similar to the partnership firm. A contract can also prevent
17/11/2013
INTRODUCTION
A contract is an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration. It is a voluntary, deliberate and legally binding agreement which becomes legally valid if meeting of minds exists between the contracting parties and establishment of a legal relation/obligation between the parties for a legal consideration and which must contain a lawful object. Contract Act
2000 AD/2056 BS defines contract as “an agreement enforceable by law, concluded by two or more parties for performing or not performing any task.” The existence of a contract requires finding the following factual elements:
•
an offer
•
an acceptance of that offer which results in a meeting of the minds
•
a promise to perform
•
a valuable consideration (which can be a promise or payment in some form)
•
a time or event when performance must be made (meet commitments)
•
terms and conditions for performance, including fulfilling promises
•
performance.
VOID AND VOIDABLE CONTRACT
If the required elements of a valid contract are not implied then the contract is either a void contract or a voidable contract.
Void Contract
A void contract is an agreement which is not recognized by the law. Contract will be deemed void on the following circumstances as per the Contract Act, 2056 (2000), Clause No. 13:
1. A contract that restricts anyone from engaging in any occupation, trade, public facilities etc that is not prohibited by the law. However, contract shall not be considered void under certain exceptions. When a contract is among partners in a partnership firm then it may contain certain restriction in activities which may prevent any of the partners involved in the firm from engaging in any trade or business which is similar to the partnership firm. A contract can also prevent
Bibliography: 1. 2. Contract Act 2056 (2000). (2000, June 17). Mann, R. A., & Roberts, B. S. (2012). Smith and Roberson 's Business Law (15th Edition). 3. South Western Cengage Learning. http://legal-dictionary.thefreedictionary.com/