CMA Foundation · Fundamentals of Business Laws and Business Communication

Void and Voidable Agreements, No Consideration No Contract

A valid contract needs the essentials of Section 10, including lawful consideration. A void agreement is not enforceable at all. A voidable contract is enforceable until the aggrieved party rejects it. Without consideration an agreement is void, except in the cases the Contract Act specifically allows. Solve MCQs by matching facts to these tests.

What this chapter covers

This chapter tells you when an agreement becomes a contract the law will enforce. It starts with the essentials of a valid contract under Section 10 of the Indian Contract Act, 1872. It then goes deep into consideration, the price or benefit each side gives, and the rule that an agreement without it is generally void.

The chapter also covers privity of contract, which says only the parties to a contract can sue on it, with a few exceptions. It ends with void agreements, including those void for uncertainty, and a comparison of void, voidable and illegal agreements. That comparison is the most tested part.

This chapter links to the rest of Paper 1. Offer and acceptance, free consent, capacity and legality of object all feed into the Section 10 checklist. Learn this chapter well and later topics such as coercion, undue influence, and contingent and quasi contracts become easier to place.

Paper 1 is 50 MCQs in one hour with no negative marking, and contract law questions are mostly short, rule-based, and answerable in seconds once your definitions are clear. This chapter is a good place to gain marks because the questions follow fixed patterns: identify the essential missing, pick the exceptions to the consideration rule, or classify an agreement as void, voidable or illegal. A student who knows the tests can eliminate two options quickly. The ideas here also support questions from other chapters, so the effort pays back more than once.

Void and Voidable Agreements, No Consideration No Contract: topics in the order to study them

1Essentials of a Valid Contract under Section 10This is the master checklist. Every other topic in the chapter is one item on it, so learn it first.
2Consideration: Meaning and EssentialsConsideration is the item that needs the most detail, so study it right after the checklist.
3No Consideration No Contract and Its ExceptionsYou can learn the general rule and its exceptions only after you know what consideration means.
4Privity of Contract and Stranger to a ContractThis builds on consideration, since a stranger to the contract is often also a stranger to the consideration.
5Void Agreements and Agreements Void for UncertaintyOnce you know the essentials, you can see which agreements fail and are void, including those with unclear meaning.
6Void, Voidable and Illegal Agreements: DifferencesThis is the summary topic. It compares everything you have learned, so do it last.

How to prepare Void and Voidable Agreements, No Consideration No Contract

Aim to learn rules as short tests you can apply to a fact pattern. Most MCQs give you a small situation and ask for its legal result.

Write the Section 10 essentials as a one-line checklist and recite it from memory until you can do so without looking.
Learn the essentials of consideration in your own words: it moves at the desire of the promisor, it can be past, present or future, it need not be adequate, but it must be real and lawful.
List the exceptions to no consideration no contract and attach one simple everyday example to each, so you can recognise them in a question.
Learn privity as a rule plus its exceptions. Ask yourself in each question: is the person suing a party to the contract?
Make a three-column table on paper for void, voidable and illegal agreements. Fill in the meaning, the effect and the example for each, then check your table against your study material.
Solve a set of MCQs on the chapter, and for every wrong answer, write down which test you applied incorrectly.
On the last day, read only your checklist, exceptions list and comparison table.

Common mistakes in Void and Voidable Agreements, No Consideration No Contract

Treating inadequate consideration as no consideration.
Fix: Remember that courts do not weigh adequacy. The consideration must be real and lawful, but it can be small.
Confusing void and voidable agreements.
Fix: Ask who can act. A void agreement is unenforceable for everyone. A voidable contract is valid until the aggrieved party chooses to reject it.
Mixing up a stranger to the consideration with a stranger to the contract.
Fix: Keep them separate. In India a stranger to consideration can sue if he is a party to the contract, but a stranger to the contract generally cannot, subject to recognised exceptions such as a beneficiary under a trust, marriage settlements and family arrangements, assignment of a contract, acknowledgment or estoppel, and agency (the principal can sue on a contract made by the agent).
Applying the exceptions to no consideration without checking their conditions.
Fix: For each exception, note the condition and test the facts against all of it. For example, under Section 25(1) a promise is enforceable without consideration only if it is in writing, it is registered, and it is made on account of natural love and affection between parties standing in a near relation to each other.
Calling every void agreement illegal.
Fix: Remember the direction: illegal agreements are void, but many void agreements, such as those void for uncertainty, are not illegal and carry no penalty.
Forgetting to check all Section 10 essentials in a fact pattern.
Fix: Run the full checklist. Under time pressure, still scan all four options for the one that tests the defect you spotted.

Last-day revision: Void and Voidable Agreements, No Consideration No Contract

A contract is an agreement enforceable by law, so every contract is an agreement but not every agreement is a contract.
Section 10 needs, first, an agreement (offer and acceptance), made by free consent of competent parties, for a lawful consideration and a lawful object, and not expressly declared void. Where the law requires writing or registration, that must also be met.
Consideration must move at the desire of the promisor, and it may come from the promisee or any other person.
Under Section 2(d) of the Indian Contract Act, consideration may be past, present or future, provided it is given at the desire of the promisor.
Consideration must be real and lawful, but it need not be adequate.
No consideration, no contract is the general rule, and the Act itself lists exceptions to it. One is Section 25(1): a written and registered agreement made on account of natural love and affection between parties standing in a near relation to each other is enforceable without consideration.
Only a party to a contract can sue on it. A stranger to the contract generally cannot. The standard exceptions are a beneficiary under a trust, marriage settlements and family arrangements, assignment of a contract, acknowledgment or estoppel, and agency (the principal can sue on a contract made by the agent).
An agreement whose meaning is not certain, or cannot be made certain, is void.
A void agreement has no legal effect from the start. A voidable contract stays valid until the aggrieved party avoids it.
An illegal agreement is void too, but it can also affect collateral transactions and can carry penalties.
Every illegal agreement is void, but not every void agreement is illegal.

Void and Voidable Agreements, No Consideration No Contract practice questions

Void and Voidable Agreements, No Consideration No Contract in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Void and Voidable Agreements, No Consideration No Contract: frequently asked questions

What is the difference between a void and a voidable agreement?

A void agreement cannot be enforced by anyone and has no legal effect. A voidable contract is valid and enforceable until the party whose consent was not free decides to reject it. Once rejected, it ends.

Is consideration always needed for a valid contract?

The general rule is that an agreement without consideration is void. The Contract Act itself allows a few exceptions, such as a written and registered agreement made on account of natural love and affection between near relations under Section 25(1). Check whether the facts fit every condition of an exception before you choose your answer.

Can a person who is not a party to a contract sue on it?

Generally no. This is the rule of privity of contract. In India a stranger to consideration can sue if he is a party to the contract, but a stranger to the contract generally cannot. Recognised exceptions include a beneficiary under a trust, marriage settlements and family arrangements, assignment of a contract, acknowledgment or estoppel, and agency (the principal can sue on a contract made by the agent), so match them against the facts given.

Does consideration have to be adequate?

No. It must have some value in the eyes of the law and must be lawful and real. The court does not check whether the price was fair.

How should I attempt MCQs from this chapter?

Spot which Section 10 essential is tested, then apply the matching rule. Eliminate options that confuse void with voidable or illegal. Since there is no negative marking, attempt every question.