A null and void contract is an invalid contract that is unenforceable, and no party has any legal obligations under its terms. There are several potential causes of null and void contracts, including:
- Vague terms
- A lack of information
- Fraud or misrepresentation
- A party has a lack of legal capacity
- It was signed under duress
- It has illegal or unlawful terms
If a contract is deemed null and void, it’s not legally binding, and you and the other parties involved will have wasted valuable time, money, and effort negotiating it.
To help you understand more, this guide explains what makes a contract null and void, how to prevent such contracts, and additional information.
What is a Null and Void Contract?
A null and void contract is essentially a contract that isn’t valid and cannot be enforced. The entire contract has no legal effect, almost like it had never existed in the first place.
As a result, neither party has any legal obligation to do anything outlined in the contract, as there’s no way for the other party to enforce it. If any property, money, or other assets were exchanged by a null and void contract, they have to be returned.
For example, if a person signs a contract to sell someone a home for $100,000, but it’s later discovered that the individual didn’t have the legal right to sell the home, the money would be returned to the would-be buyer once the contract is deemed null and void.
What Makes a Contract Null and Void
Let’s go over the potential reasons why a contract may become null and void, and therefore, how you can prevent these issues from the start.
Vague Terms
If the terms laid out in a contract are vague and confusing, it may make the contract void. Terms that aren’t clear often leave room for interpretation and can lead to misunderstandings, disputes, and may even make the contract difficult or impossible to enforce.
There are several examples of vague terminology that may void a contract. For example, if a contract says that a party needs to finish a job “as soon as possible”, there’s no deadline, and thus it’s unclear when it needs to be done by.
Similarly, if a contract says that a party needs to make “reasonable efforts” to deliver a package on time, what’s considered “reasonable” is subjective and may be argued between parties.
To prevent this problem, make sure to clearly define all of the terms and conditions in a contract with exact dates, objective language, and wording that can’t be interpreted in different ways.
Insufficient Information
Similarly, if a contract is incomplete and/or contains insufficient information, it may become void. For example, if a contract doesn’t state the date when the contract begins and/or ends, or lacks details on the price of an item being sold, it may be invalidated.
Additionally, if the contract contains certain fields or sections that aren’t filled out or are only partially filled out, it may not be legally enforceable.
To avoid this issue, ensure that every section and field is completed and that no essential elements of the contract are omitted. Make sure you clearly specify all important dates, deadlines, prices, terms, and conditions.
Fraud or Misrepresentation
Contracts in which one person conceals a fact or lies about something to convince another person to sign may be grounds for invalidation. Similarly, intentionally deceiving another person with the language in a contract to try and manipulate them into doing something detrimental to themselves may also cause a void contract.
For example, let’s say person A claims to be an electrician and enters into a contract with person B to rewire their home. However, if it is discovered that person A has no experience as an electrician, the contract is void because person A has misrepresented themselves and their abilities.
To prevent accidental fraud or misrepresentation in the contracts you create, ensure you’re transparent and honest about everything, use clear language, and be open to questions and concerns from signers.
To catch fraud or misinterpretation as a signer, verify as much information as you can before signing anything, ask detailed questions, and if you’re still concerned, consider reaching out to a professional for legal advice.
Lack of Legal Capacity
Legal capacity is one of the main requirements for an e-contract to be valid. If either party lacks the legal capacity to enter into an agreement, it becomes void. For someone to have this “legal capacity”, they must be capable of both understanding and agreeing to the terms of a contract.
There are several ways someone may be deemed as lacking the legal capacity to sign a contract. This includes if they’re:
- A minor
- Mentally incapacitated or not of sound mind
- Under the influence of drugs or alcohol
To prevent this issue, verify that every party is of legal age and is of sound mind/not under the influence of anything when reading and/or signing the contract.
Duress or Undue Influence
A contract is also rendered null and void if someone threatens or coerces another person into signing it. This could be a physical threat, a psychological threat, blackmail, or even just putting an unreasonable amount of pressure on someone to sign something against their will.
For example, someone is under duress if another person threatens to release embarrassing secrets or stories about them if they don’t sign a contract.
While you may not know if a signer is under duress from another party, you can do your part to prevent any sense of coercion on your own behalf. Ensure that you provide a reasonable amount of time for them to sign it and ask them to confirm that they’re signing the contract willingly and under their own free will.
Illegal Activity
Of course, if a contract involves or mentions any illegal activities, it won’t be valid. For example, if you sign a contract to transport illegal goods or launder money for a criminal organization, it’ll be immediately void as it violates the law.,
The way to prevent this is easy, as you simply need to ensure any contracts you create or sign don’t contain anything illegal or unlawful. Keep in mind that some laws vary from state to state, so always be aware of the rules and regulations applicable to the location where your contracts are being signed.
Preventing Null and Void Contracts
Now that you’re aware of what makes a contract null and void, let’s go over some tips to prevent this from happening for your contracts.
Clearly Define All Terms
Having clear and defined terms is one of the most important aspects of making a contract valid. Ensure all language is objective and can’t be misconstrued in different ways. While creating the contract, take the time to write it carefully and ensure every word is clear, deliberate, and leaves no room for confusion or disputes.
Also, add as much detail as possible throughout the contract and clarify everything if there’s even a chance it may be misinterpreted. Sure, this effort may make the contract a little longer, but that’s better than having the entire contract voided due to a lack of details and clear definitions.
Use Electronic Signatures
The way contracts are typically signed is evolving over time as more organizations adopt electronic signatures. Not only are they more convenient for everyone, but they’re often more secure, too.
While you may be wondering if a typed signature is legally binding, the answer is generally yes. Electronic signatures are equivalent to written signatures in many cases, thanks to the Electronic Signatures in Global and National Commerce Act (ESIGN Act) and the Uniform Electronic Transactions Act (UETA).
However, keep in mind that these signatures aren’t always valid. Some types of contracts (such as wills or powers of attorney) may still require written signatures. Also, be sure to familiarize yourself with the electronic signature laws by state to ensure all of your contracts remain legal and valid.
In addition to being legally binding in many cases, getting documents signed electronically is also streamlined and straightforward, especially when using a tool like Signaturely. This is an e-signature platform with several features to help you get contracts signed, manage your contracts, and more.
The process for getting contracts signed in Signaturely only takes a few simple steps.
1. Log in to your account, navigate to Sign on the left sidebar, and either upload your file, import your file, or choose a template. Once you have chosen the contract, click Prepare Document.
2. Next, choose whether to sign the document yourself, sign it and send it to someone else for signature, or just send it to someone else for signature. After adding your recipients and signers, click Continue.
3. After adding the fields where you want the contract to be signed, click Save and then send it for signature.
Consider Legal Advice
If you’re worried about your contracts being void, consider reaching out for legal advice from a professional. These legal experts are deeply familiar with all aspects of contract law and should be able to pick out any parts of your contract (or a contract you’re signing) that are concerning.
In addition to keeping contracts valid, this advice also protects your interests, provides peace of mind, and reduces the likelihood of future disputes. You could ask them anything, from the legality of electronic signatures to whether or not the terms in a contract are clear enough or, simply, whether the contract is fair.
Perform Due Diligence
Due diligence is a crucial aspect of both developing a strong and legally binding contract and signing contracts. This means gathering as much information as possible about the parties involved (and the details of the contract itself) to ensure everything is above board.
This may include verifying facts, assessing the mental capacity of all parties, conducting background checks, researching companies or individuals, and ensuring the terms of the contract are legally compliant.
The purpose of this research is to give you a better understanding of the contract and those involved in it, to make sure you have as much knowledge as possible before finalizing the deal.
Additionally, note that the type of due diligence you conduct also depends on the type of contract. For example, suppose you’re using e-signatures for a contract you’re sending to a client. In that case, you want to ensure that electronic signature verification is in place so you can confirm the signature came from the right person.
Triple Check Your Contract
Once the contract is written, read through it multiple times to check for any issues or problems that may void it. In addition to checking it over yourself, consider handing it off to someone else (or numerous people) so they can give it a fresh set of eyes and see if they see anything problematic.
Checking over a contract multiple times is also important for people signing a contract, to ensure that they don’t miss something that may come back to bite them in the future.
Sure, it may take a little extra time, but you’ll be thanking yourself if one of these triple checks catches something that could have voided an otherwise valid contract.
Ensure a Written Record
Agreements come in a variety of different shapes and sizes, including some that are difficult to prove and enforce, such as oral or handshake agreements.
The question of whether a verbal agreement is legally binding is confusing and largely depends on the context and jurisdiction. However, even if they are, they can be difficult to enforce, as there’s no evidence that it ever occurred.
As a result, you should keep a written record of any important verbal agreement that takes place. However, keep in mind that just because something is written doesn’t automatically mean it’s a legally valid contract, either. For example, the question of whether an email is legally binding is a complicated one and depends on several different factors.
When in doubt, create a valid written record and a lawful contract for any agreement that you’re afraid might not be enforceable without one. If not, your verbal or handshake agreement that you thought was legal may end up void.
Difference Between a Voidable and Void Contract
While a void and voidable contract may sound similar, there’s a key difference. A void contract is one that was never valid or legal in the first place, due to any of the reasons listed previously.
An example of a void contract is an agreement to sell illegal substances, which is void because it includes terms that are against the law.
On the other hand, a voidable contract starts valid, but may contain certain aspects or conditions that may allow one or more parties to void the contract legally. Some reasons a contract may be voidable include that it fails to disclose an important fact, has incredibly unfair terms, was signed under duress, or contains a mistake. The contract also remains valid until a party decides to take action and void it.
An example of a voidable contract is one where a home seller conceals a defect, such as a cracked foundation or another major issue, and fails to disclose it to the buyer. Because the seller didn’t disclose this important fact, it may make the home sale contract voidable.
As a result, it’s important to keep in mind that voidable contracts can often be just as problematic as void contracts, only that the issues with them may not be discovered immediately.
| Aspect | Void Contract | Voidable Contract |
| Definition | A contract that was never valid or legal due to its terms or contents. | A contract that is initially valid and enforceable but contains conditions allowing one or more parties to void it. |
| Validity Status | Invalid from inception (“void ab initio”). | Valid and enforceable until a party chooses to void it. |
| Common Reasons | – Contains illegal terms- Impossible to perform- Infringes on someone’s rights | – Failure to disclose a material fact- Unfair or one-sided terms- Signed under duress- Mistake in the contract |
How to Legally Void a Contract
If you want to know how to void a contract legally, there are several different ways it can happen:
- One party provides false information or conceals important details from another.
- A person forces, threatens, or coerces another to sign a contract against their will.
- One or more parties lack the capacity to enter the agreement. This may be due to being a minor, or being under the influence of drugs or alcohol.
- If the terms of the contract are incredibly one-sided, unfair, or oppressive.
- There’s a mutual agreement between all parties to end the contract.
- If one person breaches the contract, the other may be able to void it.
- If there’s a common mistake about a fundamental aspect of the contract.
Avoid Null and Void Contracts With Signaturely Templates
One of the best ways to avoid the headaches, frustration, and legal issues that come from null and void contracts is to use templates for your agreements. This is because they save you time, give you a head start on your contracts, boost consistency, and often contain the legally essential provisions to ensure compliance.
Signaturely offers a comprehensive collection of contract templates, which have all been reviewed by both proofreaders and legal experts to ensure they’re high-quality.
In addition to offering many useful templates to get your contracts off to a strong start, Signaturely also allows you to sign contracts online, manage all your contracts in one place, and view document activity in seconds. The platform also keeps an audit log for all contracts and offers seamless collaboration with others.
If you want to try Signaturely out and see if it’s right for you, make sure to check out the generous free trial.
FAQs About What Makes a Contract Null and Void
If you still have questions about what makes a contract null and void, check out these frequently asked questions and their answers:
The legal definition of null and void refers to a contract that has no legal effect and has never been valid.
Several factors can render a contract null and void, including vague terms, insufficient information, fraud, duress, a lack of legal capacity, or illegal contents or terms.
Some things that make a contract legally invalid include a lack of essential elements (like an offer and acceptance), coercion, misrepresentation, or if the terms are extremely unfair or unjust.
A contract may be unenforceable if one party doesn’t understand the terms, was under the influence of drugs or alcohol when they signed it, or if the contract involves illegal activities of some kind.
To make a contract null, you can mutually agree to void the contract, breach the contract, or prove that the contract was signed under duress of some kind. A contract may also be null if it contains a fundamental mistake, extremely unfair terms, or if one party lacked the legal capacity to sign it.
What You Need to Remember About Null and Void Contracts
When you’re creating or signing contracts, it’s important to be aware of the things that may make it null and void. If not, you could end up with a contract that’s unenforceable, invalid, and has no legal effect.
Thankfully, there are several steps you can take to ensure your contracts are always valid, including clearly defining all terms, conducting thorough due diligence, reviewing the contract multiple times, and utilizing high-quality templates.
