Contract Act 1872 - Void and Voidable Agreements

The basic definitions relevant to void and voidable agreements are

1. Void (sections 2(g), 2(j)) - an agreement that is not enforceable by law, or a contract which ceases to be enforceable
2. Voidable (section 2(i)) - an agreement which is only enforceable at the option of one or more of the parties, but not at the option of all the parties

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When is an agreement void or voidable?

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Void Agreements

The term "void contract" is typically not used because, by virtue of being unenforceable, the agreement does not become a contract to begin with. The following situations make the agreement void:

1. When there is a mistake of fact (sections 20, 22) - When both the parties are under a mistake of fact essential to the agreement, the agreement is void. For example, if X agrees to sell to Y a book, but the book was stolen the previous day and neither X nor Y are aware of this fact, then the agreement is void as X cannot possibly give the book to Y. However, if X knew that the book had been stolen but Y did not, then the agreement is valid and X can be compelled to perform the agreement to the satisfaction of Y (by finding a reasonable substitute or compensating Y accordingly).
2. When there is a mistake of law not in force in India (section 21) - If the agreement is based on a mistake regarding any law in force outside India, such a mistake is considered a mistake of fact, and the agreement is accordingly void. However, if there is a mistake regarding a law in force in India, the agreement will remain valid.
3. When the consideration or object, in part or in full, or if there are multiple considerations or objects, when any one of the considerations or objects, are unlawful (section 23)
4. When there is no consideration (with certain exceptions) (section 25)
5. If the agreement is in restraint of marriage (section 26) or in restraint of legal proceedings (section 28)
6. If the agreement is in restraint of trade (section 27) - Agreements with reasonable restrictions, as evaluated by the court, are allowed, for example, certain non-compete clauses, or when the restraint is being imposed due to a transfer or goodwill.
7. If the meaning of the agreement is uncertain or cannot be made certain (section 29) - 
8. Wagering agreements

Voidable Agreements

One of the fundamental requirements of an agreement is free consent. If the consent of any party is not freely given, that is, if it is caused by coercion, fraud, misrepresentation, or undue influence, the agreement is voidable at the option of the party whose consent was not freely given. (sections 19, 19A)

Click here for the full text of the Indian Contract Act 1872 (from indiacode.nic.in)