A void contract is a legal contract which is invalid from the start because some aspect of the contract renders it unenforceable or illegal. This is in contrast with a voidable contract, a contract which is valid at the time it is created but which can be canceled or voided later. It is important to distinguish between these two legal concepts because while no performance is required under a void contract, it is possible to be bound by a voidable contract.
There are several reasons why a contract can be void. The first reason is because the contract involves an illegal activity; people cannot be bound by law to participate in an illegal act. For example, a contract between a drug dealer and a customer is a void contract. Thus, drug dealers cannot sue their customers for nonperformance because there is no contract to hold the customer to.
Another reason a contract might be void is because it is structured in such a way that it cannot be performed. A variety of things may cause a contract to be impossible to perform. A contract which is not structured properly or which is illegal is also void. For example, wiseGEEK cannot enter into a contract with President Roosevelt, because President Roosevelt is dead and the contract is not enforceable. Likewise, a contract which involves coercion may be considered void because it is not legal.
With a voidable contract, on the other hand, one of the parties is bound to the contract but it can be voided later, although it may not necessarily be voided. A classic example of a voidable contract is any contract involving a minor. Minors can enter into contracts, but these contracts cannot be enforced. This is why minors are often asked to have an adult cosigner, so that the other party to the contract can be assured that it will be fulfilled. College students applying for student loans below the age of majority, for example, will be asked to have a cosigner to guarantee the loan.
People usually do not set out to write a void contract. There have been situations in which people have attempted to litigate for nonperformance or other issues and learned over the course of litigation that the contract is void and that there is no legal recourse. When signing or writing any contract, it is very important to review the contract with care and to have a lawyer check it over to confirm that it will be legally valid and to make sure that all of the terms of the contract are fully understood.