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However, when a contract is being written and signed, there is no automatic mechanism available in every situation that can be utilized to detect the validity or enforceability of that contract. Practically, a contract can be declared to be void by a court of law. [1] An agreement to carry out an illegal act is an example of a void agreement.
Black's Law Dictionary defines 'void' as "[n]ull; ineffectual; nugatory; having no legal force or binding effect...." [1] In the case of a contract, this means there is no legal obligation, therefore there can be no breach of contract since the contract is null, but there may be an implied contract which requires the recipient of goods or services provided to pay their reasonable value.
But no power short of the general law ought to restrain his free discretion. A contractual undertaking not to trade is void and unenforceable against the promisor as contrary to the public policy of promoting trade, unless the restraint of trade is reasonable to protect the interest of the purchaser of a business. [2]
Mistake of law is when a party enters into a contract without the knowledge of the law in the country. The contract is affected by such mistakes, but it is not void. The reason here is that ignorance of law is not an excuse. However, if a party is induced to enter into a contract by the mistake of law then such a contract is not valid. [3]
Restraint imposed on a vendor of business must be reasonable and is binding if there is a genuine seal of goodwill. Under common law, contracts to fix prices are legal. Sole supplier ("solus") agreements are legal if reasonable. Contracts which contravene public policy are void.
The Paul Armstrong Company et al, 263 NY 79 (1933) "In every contract there is an implied covenant that neither party shall do anything, which will have the effect of destroying or injuring the right of the other party, to receive the fruits of the contract, which means that in every contract there exists an implied covenant of good faith and ...
Additionally, a contract is void ab initio if its cause, object, or purpose is contrary to law, morals, good customs, public order or public policy; it is absolutely simulated or fictitious; its cause or object did not exist when it was concluded, is impossible, or is "outside the commerce of men"; the intention of the parties cannot be ...
Magna Alloys & Research (S.A.) (Pty) Ltd. v Ellis [1] is an important case in South African law, particularly contract. It established the principle that a restraint of trade is enforceable unless the court is convinced that it is unreasonable. the leading case on restraint of trade is Magna Alloys and Research ( SA) (PTY) Ltd Vs Ellis 1984 (4 ...