Under the Indian Contract Act, 1872, a contract can be declared voidable under specific conditions where the free consent of one of the parties is compromised, or other certain situations make it unfair to enforce the contract strictly. A voidable contract is unique in that it remains valid and enforceable unless one party chooses to void it. However, if it is annulled by the aggrieved party, it becomes unenforceable from that point onwards. This flexibility is what distinguishes a voidable contract from a void contract, which is invalid from inception and cannot be enforced by either party under any circumstance.

Conditions Under Which a Contract Becomes Voidable

The Indian Contract Act, 1872, specifies various conditions that render a contract voidable.

The primary conditions are as follows:

1. Coercion (Section 15 and Section 19)
   Definition: Coercion refers to committing, or threatening to commit, an act forbidden by the Indian Penal Code, or unlawful detainment of property, to compel a party to enter into an agreement.
   Example: If a person threatens physical harm to someone to force them to sign a contract, this constitutes coercion.
   Effect: Contracts formed under coercion are voidable at the discretion of the aggrieved party. They can choose to enforce the contract or declare it void.
   Case Law: In Chikkam Ammiraju v. Chikkam Seshamma (1917), a man threatened to commit suicide unless his wife and son signed a contract. The court held that this threat amounted to coercion, making the contract voidable at the instance of the aggrieved party.
    
2. Undue Influence (Section 16 and Section 19A)
   Definition: Undue influence involves one party, due to a dominant position or fiduciary relationship, exploiting their power to influence the other party's decision.
   Example: A guardian persuading a minor to transfer property to the guardian under the guise of protecting the minor's interests.
   Effect: If a contract is induced by undue influence, it is voidable at the option of the party whose consent was influenced.
   Case Law: In Raghunath Prasad v. Sarju Prasad (1924), the court found undue influence when a man persuaded his nephew to enter into a contract that was not in his best interest. The contract was held voidable at the discretion of the influenced party.
    
3. Fraud (Section 17 and Section 19)
   Definition: Fraud occurs when one party intentionally deceives another to gain consent, often through false statements, suppression of important facts, or other deceptive practices.
   Example: Selling a property while concealing known defects or liabilities related to it.
   Effect: A contract induced by fraud is voidable at the option of the deceived party, who can either affirm the contract or rescind it.
   Case Law: In Derry v. Peek (1889), the court held that for fraud to make a contract voidable, there must be evidence of intentional deceit. Though an English case, it has influenced Indian courts in fraud cases.
    
4. Misrepresentation (Section 18 and Section 19)
   Definition: Misrepresentation refers to the unintentional or innocent making of a false statement by one party to induce the other party into a contract.
   Example: A seller unintentionally providing incorrect information about the year a car was manufactured.
   Effect: If a contract is made due to misrepresentation, it is voidable at the option of the misled party, provided they had no independent knowledge of the truth.
   Case Law: In Solomon v. Solomon (1897), it was determined that a contract entered under misrepresentation could be avoided by the aggrieved party if they were induced by that misrepresentation.
    
5. Mistake (Section 20)
   Definition: A contract may be voidable if there is a mistake by both parties regarding a matter of fact essential to the agreement.
   Example: A seller and buyer both mistakenly believe a painting to be an original by a famous artist, when it is actually a replica.
   Effect: Although typically, a mutual mistake of fact renders a contract void, in certain scenarios, the contract could also be deemed voidable.
   Case Law: In Bell v. Lever Bros Ltd (1932), it was held that if both parties are mistaken about a fundamental aspect of the contract, it could be set aside.
6. Breach of Contractual Terms (Section 39)
   Definition: If one party refuses or is unable to perform their obligations as stipulated, the contract may be declared voidable by the non-breaching party.
   Example: A vendor fails to deliver goods as per the agreed terms, giving the buyer the right to terminate the contract.
   Effect: In case of an anticipatory or actual breach, the innocent party can either terminate the contract or choose to continue it.
   Case Law: In Poussard v. Spiers and Pond (1876), it was ruled that breach of an essential term or condition allows the aggrieved party to void the contract.

How a Voidable Contract Differs from a Void Contract

Voidable and void contracts differ significantly in their validity and enforceability:

1. Definition and Nature
   Voidable Contract: A contract that is valid until one party chooses to void it. It becomes void only after it is rescinded.
   Void Contract: A contract that is null and has no legal effect from the outset. Neither party can enforce a void contract in a court of law.
2. Enforceability
   Voidable Contract: Enforceable at the discretion of the aggrieved party. The party whose consent was compromised can either ratify (accept) or rescind the contract.
   Void Contract: Not enforceable by either party. Since a void contract lacks any legal basis, neither party has a right or remedy under the contract.
3. Conditions Leading to Voidable and Void Contracts
   Voidable Contract: Results primarily from the absence of free consent, such as cases of coercion, undue influence, fraud, or misrepresentation.
   Void Contract: Arises when an agreement violates public policy, involves an illegal object, is made with a minor, or involves other illegalities. A void contract is null from inception.
4. Legal Consequences and Remedies
   Voidable Contract: The aggrieved party has the right to rescind the contract or to enforce it, depending on their preference. If rescinded, the parties are typically returned to their pre-contractual positions.
   Void Contract: No legal obligations exist since it has no effect in the eyes of the law. Any performance or payment made may be reclaimed, but the agreement itself cannot be enforced.

Examples of Void and Voidable Contracts

1. Void Contract Example
   Illegal Agreements: A contract to commit a crime, like a contract to buy illegal drugs, is void. Neither party can seek legal recourse if the contract is not honoured.
2. Voidable Contract Example
   Property Sale Under Coercion: If a person is forced to sell property under the threat of harm, this sale agreement is voidable at the discretion of the coerced party. If they choose, they can rescind the agreement, rendering it unenforceable.

Case Laws Differentiating Void and Voidable Contracts

1. Void Contract: Mohori Bibee v. Dharmodas Ghose (1903)
   This leading case dealt with a minor entering into a mortgage agreement. Since minors cannot form binding contracts under Indian law, the contract was held void from the start. This case established that agreements with minors are void.
2. Voidable Contract: Chinnaya v. Ramayya (1882)
   In this case, the undue influence exerted in a familial setting allowed the aggrieved party to void the contract. The court emphasized that the contract was valid until voided by the party subjected to undue influence.

Key Differences Summarized

Aspect	Voidable Contract	Void Contract
Definition	Valid until annulled by the aggrieved party.	Invalid from inception; no legal effect.
Enforceability	Enforceable at the option of one party.	Unenforceable by both parties.
Remedies	Rescind or enforce as per the aggrieved party's discretion.	Not enforceable; recovery allowed only in specific cases.
Legal Consequences	Can be set aside by the influenced party.	Treated as if it never existed legally.
Examples	Contracts under fraud, misrepresentation, etc.	Contracts with minors, illegal agreements.

Conclusion
The Indian Contract Act, 1872, provides significant protections for parties entering into contracts by differentiating between void and voidable contracts. The doctrine of voidable contracts allows individuals to opt out of agreements that were entered under coercive or deceitful conditions, ensuring that contracts are formed based on free will and informed consent. Void contracts, on the other hand, reflect the judiciary's stance that agreements which go against public policy, legality, or the foundational

Written By: Prithwish Ganguli, Advocate, LLM (CU), MA in Criminology & Forensic Sc (NALSAR), MA in Sociology (SRU), Dip in Cyber Law (ASCL), Dip in Psychology (ALISON), Visiting Faculty at Heritage Law College & Heritage Business School