A contract is probably the basis of all businesses. Every business enters into a contract with its employees, clients, shareholders, etc. So, what makes a contract null and void? If you are someone who deals with contracts or agreements in your day-to-day business runnings, this article is for you.
When two parties sign a contract, it is anticipated that both of them will abide by the rules of the agreement. However, some aspects make a contract null and void. In legal terms, it makes the contract invalid.
Let us start with a simple yet important question.Why do we need a contract?
Why do we need a contract?
You enter into business with someone only if you trust them, right? So, why do you need a piece of paper to verify it? I was curious because, as a marketing business coach, I choose not to use contracts. If I can’t do well enough to keep your business, then I don’t deserve to have it.
However, I know this is just how I choose to operate, and many others are different. So I did a bit of a survey with my clients. Most of them mentioned the following three reasons:
Building commitments
A contract is much more than a written agreement. Contracts assist in building trust, relationships, and a great outcome. Contracts tie both parties to their assigned duties, leaving no doubts about the process to be followed.
Preventing conflicts
While signing a contract, both parties negotiate to get the best deal for themselves. Initially, they know what each party has to offer the other one. As everything is discussed prior, there is no confusion while implementing the deal.
For example, in a marketing business coaching contract for three months, the coach will help the business owner grow their bottom line for that period. As both the coach and the client know what to expect, their chances of getting into a conflict are less, and building a solid partnership is high.
Staying safe
Contracts also leave no room for violation because it comes with a penalty if one party doesn’t work by the agreement. Therefore, to avoid legal penalties, both parties aim to do their utmost in keeping the contract.
What makes a contract null and void?
Whenever a contract is signed, both parties should acknowledge what they agree to in that contract. They are obliged to abide by every word in the agreement unless proven as null and void.
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There can be several reasons to categorise a contract as null and void. Some of the reasons are listed below-:
·Illegal and Unlawful Reasons
If a contract states something unlawful or illegal in it, then the contract automatically becomes null and void. And if the other person fails to complete the contract, there will be no legal actions taken as the agreement was invalid.
For example, if an agreement states that you will be providing finances for a crime and have signed it, there is no need to worry as the contract states illegal activity.
·Uncertain & Confusing Agreements
If a contract doesn’t clearly state what both parties need to act on and creates a sense of uncertainty and confusion, it makes the contract null and void. So, for example, if the contract is about agreeing to a particular investment plan and not mentioned in the agreement, it’s a void contract. And there cannot be any legal penalty for not abiding by the contract’s rules.
·The Incompleteness of the Contract
If the contract misses out on one or more binding agreements, it is a void contract. For example, if the contract does not specify the starting date or the contract’s deadline, it can be considered invalid. On the other hand, if the prices are not explicitly mentioned, the contract is nullified.
·Incapacity of a Party
Suppose one party cannot understand what they agree to; it makes the agreement void. For example, if one of the parties is mentally ill and cannot agree through proper understanding, the contract is void. Also, a contract with someone who is below the age of 18 is a void contract.
·A Mistake
A contract is void when both the parties are mistaken on the agreed matter. For example, you should shoot a wedding video for a client, but you could not on the agreed date because you are incredibly sick. It will be considered a common mistake that will make the contract void.
Conclusion:
Contracts create a sense of discipline, good relationships and offer clarity. Some people prefer to run with contracts so that everything is crystal clear and there is no room for error in knowing what’s expected.Above, I’ve listed several examples of what makes a contract null and void. For further information, reach out to me or connect with your lawyer.
