Void, Voidable and Unenforceable Contracts

Question 1

Explain the concept of Void Contracts.

Answer 1

It describes agreements which neither party can fully enforce.

An insurance contract would be deemed void for the following reasons:

1. ) No insurable interest at the time of effecting a life insurance policy.
2. ) No ‘consensus ad idem’ or there was a fundamental mistake or disagreement from the start.
3. ) There was fraudulent misrepresentation or concealment at the pre-contractual stage.
4. ) Non-fulfillment of a policy condition precedent to the contract.

Question 2

Explain the concept of Voidable Contracts.

Answer 2

It is a valid contract. It is binding but one party or both have the right to set it aside.

An insurance contract would be deemed voidable for the following reasons:

1. ) Misrepresentation
2. ) Drunkness
3. ) Duress
4. ) Insanity

It is voidable because of innocent or fraudulent misrepresentation. However, the insurer has the right to ignore the breach of good faith. If repudiated, it is because of misrepresentation of material facts.

Question 3

Explain the concept of Unenforceable Contracts.

Answer 3

It cannot be enforced in a court if one party refuses to keep to the agreement. This may be useful for other purposes such as a defence to claim.