First Principles of Business Law
Circumstances that may invalidate a legal transaction

1. Making a legal transaction 'void'

1.2. Distinguishing 'void' and 'voidable’ transactions     

 

 

So far, we have said that particular circumstances may make a legal transaction void.  In such cases, there is no need for a court order: the transaction is already of no effect.  At most, it may be desirable to ask a court to confirm that, in the circumstances, the transaction is indeed void.

In other circumstances, a legal transaction is not made void, but ‘voidable'.  This means that it exists as a valid transaction until a court sets it aside as void.  In other words, unless a court decides that a voidable transaction should be made void, it continues to be valid. There are various matters which generally affect a court's willingness to set aside a transaction as void.

  •  A party who wishes to invalidate a legal transaction must seek relief within a reasonable time of having the opportunity to do so. If they delay for too long, the court will treat their delay as a decision to ratify the transaction and will not assist them.
  • The right to avoid a transaction will also be lost if, after discovering the facts which might give rise to such a right, the party seeking relief does anything that is inconsistent with an intention to have the transaction set aside.
  • Relief will not be granted to a party if they have themselves engaged in conduct which the law regards as improper. This is because the rules of equity require that a party seeking relief must have behaved appropriately and ask for relief with 'clean hands'. 

 

 

 

 

 

 

 

 

 

 

 

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