Introduction
The spirit of law especially in contracts is to protect the disadvantageous who have been induced to enter into unfair contracts by the advantageous one who seek to benefit from such kinds of contract, and this may largely explain as to why whether be it illegal or void contract will not be enforced before the court of law. This work therefore seeks to highlight the main principles regarding the illegal, void and unenforceable contract while confining the discussion to the spirit of the Law in protecting the innocent party to contracts.
Principles relating to Void, Illegal and unenforceable agreements
All agreements may not be enforceable at law. Only those agreements which fulfill the essentials laid down in Section 10 of Law of Contract Act, can be enforced.
Void Agreement
The Contract Act specifically declares certain agreements to be void. According to section 2 (1) (g), an agreement not enforceable by law is void. Such an agreement does not give rise to any legal consequences and thus void ab initio.
Contract Expressly declared void under the law of Contract Act
The law of Contract Act, declare certain transaction to be void and therefore such agreement cannot be enforced with the intention to protect the innocent party and not benefiting the advantageous ones and this includes the followings: -
Agreement by a minor or a person of unsound mind interms of Section 11, agreement of which the consideration or object is unlawful interms of Section 23, Agreement made under a bilateral mistake of fact material to the agreement interms of section 20, Agreement of which the consideration or object is unlawful in part and the illegal part can not be separated from the legal part as per Section 24, Agreement made without consideration as per Section 25 of the Law of Contract Act .
Also it includes, Agreement in restraint of marriage as per Section 26, Agreement in restrain of trade as per Section 27, Agreement in restrain of legal proceedings as per Section 28, Agreements the meaning of which is uncertain as per Section 29, Agreements by way of wager interms of section 30, Agreements contingent on impossible events as per Section 36 and Agreements to do impossible acts as per Section 56 of the Law of Contract Act .
Some discussion on void agreement and its relating principles
Agreement by a Minor
A person who has not the age of majority signifies as minor. Law acts as the guardian of minors and protects their rights, because their mental facilities are not mature and thus, they do not possess the capacity of judge what is good and what is bad for them. Accordingly, where is a minor charged with obligations and the other contracting party seeks to enforce those obligations against the minor, the agreement is deemed as void.
In the case of Nash v. Inman, the defendant was an infant college student. Before proceeding to college, his father bought him all the necessary clothing material. However, while in college, he bought additional clothing material from the plaintiff but did not pay for them and was sued. His father gave evidence that he had bought him all the necessary clothing material. The court held that, though the clothes were suitable to the minor’s condition in life, these goods were not necessaries because the minor was well provided with clothes by his rich father.
Agreement by a person of unsound mind
A person who does not possess a sound mind or whose mental powers are not arranged or whose mental condition is not under his or her own control. Any agreement by person of unsound mind is absolutely void because he has no capacity to judge, what is good and what is bad for him.
In Imperial Loan Co. Ltd v Stone, the defendant was sued on a promissory note he had signed. He argued that at the time, he was insane and therefore incapable of comprehending the nature or effects of his acts and that he was not liable on the promissory note as the contract was void by reason of insanity. In the words of Lopes L.J. “In order to avoid a fair contract on the ground of insanity, the mental capacity of the one contracting must be known to the other contracting party.
Agreement Made Without Consideration
Within the meaning of Section 25 of the Law of Contract Act, An agreement made without consideration is void, It is expressed in writing and registered under the law for the time being enforce for the registration of (documents), and is made on account of natural love and affection between parties standing in a near relation to each other. This is reflected in the case of Alfi East African v Themi Industries and Distributors Agency Ltd, where the sale of machinery was not supported by a consideration that in price in contracts of sales, therefore the contract was held to be void as an essential element of a contract of sale that is price which is the consideration for a contract was not stated.
Generally, the underlying principle as far as void contract are concerned is that, such contracts will not be enforced as the law acts as the guardian of those who are disadvantageous and thus protects their rights against those with dirty minds who seek benefit under void contract.
Illegal Agreements
A contract is illegal when it contains unlawful object and consideration and therefore such contract is unenforceable as it is a contrary to the law or public policy. The provision of section 23 of Law of contact Act, declare an agreement with unlawful object and consideration null and void and hence from its very beginning or from its inception was not a contract.
Some discussion on illegal contract and its relating principles
An illegal contract is un-enforceable. This is because for an agreement to be enforceable, it must have been entered into for a lawful purpose. A contract may be declared, illegal by statutes or a court of law.
Contracts declared illegal by Statutes
Under the employment Act, wages or salaries are payable in money or money’s worth. A contact to pay wages or salary in kind is illegal and void. Such a contract is said to be illegal as formed and is unenforceable. Land laws of particular countries restrict on sale or lease of land to a foreigner, Restriction put by trade laws, no license no trade.
Contracts declared illegal by courts of law
A contract to commit a crime, tort or fraud.
Such a contract is illegal and unenforceable as it is a contrary to public policy to commit crimes, torts or fraud in Bigos v. Boustead , where the object of the contract was to violate the English Exchange control regulations; it was held that the contract was illegal and unenforceable.
Contracts liable to promote corruption in public.
Such a contract is unenforceable as corruption is contrary to public policy. In Parkinson v. College of Ambulance and Another,the secretary of a charitable organization informed that plaintiff that it was on to it. The plaintiff gave ₤3,000 but was not knighted as only the King could bestow the title. In an action to recover the sum, it was held that it was irrecoverable as the contract was illegal.
Contracts liable to promote sexual immorality.
These are contracts contra bonos mores (contrary to good morals). Such a contract is unenforceable on account of illegality. The contract may be illegal as performed. In Pearce v. Brooks, the plaintiff owned a beautiful horse drawn carriage which he went to the defendant for 12 months at stated charges. The plaintiff knew that the defendant was a prostitute and intended to use the carriage to solicit influential customers. In an action to enforce payment of the hiring charges, it was held that that contract was unenforceable as it was illegal as performed as its purpose was to promote sexual immorality.
Generally in this aspect also the court will not enforce the illegal contract with the view of protecting the innocent party and that’s why an illegal contract is said to be beyond the pale of the law and thus such a contract is unenforceable as it creates no rights and imposes no obligations on the parties. Neither party is bound to perform. Money or assets changing hands under an illegal contract is irrecoverable as gains and losses remain where they have fallen.
Unenforceable agreements
This includes all agreements that basically has not fulfilled some legal obligations or formalities that is the suffer some technical defects like insufficient stamp, lack of signature just to mention a few. Section 64 of the Land Act, requires the disposition of a right of occupancy be in writing and being signed short of that the agreement becomes unenforceable. The section reads “A contract for the disposition of a right of occupancy or any derivative right in it or a mortgage is enforceable in a proceeding only if– (a) the contract is in writing (b) or there is a written memorandum of its terms; the contract or the written memorandum is signed by the party against whom the contract is sought to be enforced”.
CONCLUSION
Generally, a contract lacking some of legal formalities like a signature will not be enforced and the same extends to both void and illegal contract, and this reflect the intention of the Law to protect the disadvantageous one as the contract might be induced by either fraud or misrepresentation and hence enforcing it will generally be a detriment to the innocent party and a blessing to the advantageous one.
