Posted by / Tuesday 20 March 2018 / No comments

The Legal Framework in which Businesses Operate - void contracts

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The Legal Framework in which Businesses Operate
The legal framework refers to the set of guidelines, rules of conduct and regulations within which any entity operates. Similarly, the business legal framework describes the set of laws which guides the conduct of business activities in a country. Any business within this legal space must carry out its activities bearing in mind that the laws which guide how business is done in a country must be obeyed since these laws are enforceable in the courts.

For businesses to continue to exist in a country or a region, they must demonstrate that they are committed to obeying the laws which govern doing business in that country. A business organization which is not committed to operating within the legal framework of its host country is bound to have problems going forward.

A contract is a voluntary, deliberate, and legally binding agreement between two or more competent parties. In the business environment, a contract will usually be between two business organizations or between two parties.  Although contracts are often written documents, they can also be verbal or implied in a business transaction between two parties.

That there is a contract does not necessarily mean that a contract can be enforced. For example, a void contract cannot be enforced by a law court.

A contract is said to be void if it has any or a number of these elements.

If it is illegal
 A contract is void if it is illegal from the very moment it is made. As indicated earlier pouring a toxic waste in public is illegal according to the law then if a company enters into agreement to collect another companies toxic waste and dump this in a public place such a company cannot seek redress in court if it was not paid in court because the activity it sought to perform is an illegal act.

If declared null and void by a court
A contract is also void if it is legal but have been declared by a court as null and void perhaps because the court is of the view that the contract as it stood violates certain basic principles such as human right, or that it is not fair to either party or because the contract goes against a policy made by the government of the country in which the business is located.   

If the laws of the land change
A contract can also be termed as a void contract if there has been changes in the law of the land or policies made by the government which have made it untenable in law.

None compliance with the provisions of the contract
A contract can also be declared void if the provisions in the contract has not been fully complied with by both parties.

Absence of capacity to contract
Lack of capacity to contract (such as arises from being an infant or minor, intoxicated, or insane) automatically makes a contract void. A contract that is void only in one or few parts may be saved by the process of severance. Not to be confused with voidable contract.

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