Whether it be entering into a contract or simply trying to enforce contractual terms, contracting parties are often faced with terminology and phrases that they have not been faced with before and the consequences of which they may not fully appreciate.
As a rule of thumb, contracting parties must pay attention to elements of a contract that are linked or elude to the “validity” or “voidability” of a contract.
In other words, the terms or phrases which relate to “valid”, “void”, or “voidable”.
What Is A “Valid” Contract?
A valid contract refers to an agreement that has been concluded satisfying all of the requirements for a valid contract: consensus, certainty, offer and acceptance, possibility, legality, capacity and formalities.
All of the requirements are required to have been met in order for there to be a valid contract. Should these requirements not be met, it would mean that a valid contract was not concluded, which will affect the enforceability of the contractual terms between the parties.
For example, the requirement of legality requires that contractual terms contained in an agreement not be in contravention with any existing legal rule, be it existent under the common law or in legislation. One of the main principles applied here is the Sasfin principle which indicates that contracts which are against public policy will not be enforceable.[1]
What Is A Voidable Or Void Contract?
Determining whether or not a contract is voidable is linked to the requirements for concluding a valid contract. A voidable contract refers to an agreement which may be rendered unenforceable due to circumstances which have undermined a requirement or requirements for a valid contract.
Some of the factors which may render a contract voidable are:
- Undue influence
- Failure to disclose a material fact
In these instances, the parties may not have reached an agreement if the undue influence had not taken place or if the disclosure had.
A void contract on the other hand, refers an agreement where from the onset, the contract is unenforceable (void ab initio) and is the converse to a valid contract. For example, a contract in relation to sexual services will be void from the onset because it is not legal.
Conclusion
The three “V’s” of contract speak to enforceability and are intrinsically linked. Often, legal assistance will be required to differentiate between the levels of enforceability and contracting parties are invited to seek legal advice before entering into any contractual arrangement.
Contact an attorney at SchoemanLaw for your Contract Law needs!
[1] Sasfin (Pty) Ltd v Beukes1989 (1) SA 1(A).
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