Know About Void Ab Initio Mean In Contract Law?

Ab Initio is a word derived from Latin that means ‘from the beginning’. The word is used to illustrate the agreements and contracts which cannot be legally enforceable. Void ab ignition is such a contract or an agreement that is completely invalid since the very beginning. They cannot be enforced upon anyone from the moment they are made. The contracts are not legally binding and contain one or more than one vitiating factor.  It is not restricted only to an agreement or contract. It can also be a law, sale, or any other action that is null. Such contact or action has zero to nil legal effect therefore, it cannot be ratified or validated.

If we look at the term Void Ab Initio from a broader perspective concerning the law, it means that the agreement or a contract cannot be legally enforced by any of the parties involved. Under such a situation if the court declares the action or a document void ab initio, then following this both the parties return to their former positions before the event. The parties and the stakeholders involved in the contract or documents are not legally bound to adhere to the terms and conditions. Whatever is written in the agreement stands invalid as a question has been raised over its validity. There may be a possibility that some of the exceptions do apply. Such type of a context was never valid and it lacks the legal position since its commencement.

Read More about UAE National Lawyers in Dubai & Law Firms in Dubai

Some of the characteristics of such a contract are: Under such a contract either of the toe or more parties involved are not legally obliged to perform based on the terms of the contract. Such a contract does not create legal rights or obligations for any of the parties involved. On the other hand, under such a contract there is no need to pay any compensation to any of the parties involved in the document or a contract. Void ab initio may occur if the party signed the contract under duress.

For instance, if any person or individual enters into a contract with a vendor relationship with a person who is dead, the contract becomes void. Under this, neither of the parties is legally responsible to fulfill the agreement or contract. If any perks or benefits are received they must be returned back. Let us compare vid ab initio contracts with voidable contracts under which any of the parties can opt not to have a legally enforced contract. Such a contract is known as an avoidable contract which has some features discussed below:

Under this contract, any of the parties involved in the contract have the option to enforce it. The parties may receive compensation if they rightfully revoke the agreements. Any of the parties whose consent is caused has the right to contract the void option. For instance, if you are into a contract to buy a car or a vehicle, and found out on a later date that the terms of conditions are misinterpreted by the salesman, the party has the right to declare the contract is legally void. The person will get back the money and need not purchase the car or vehicle. This may be time bounded therefore; the time can be taken into consideration.

Types of Mergers 

We define a merger as a contract or an agreement between the two or more existing businesses or enterprises to form a new company. A merger is regarded as one of the ways to expand your business or company operations. It is a way forward to reach and extend your business into new segments and niches. This is also done with the intent to increase the market share of the overall market. Mergers are similar to an acquisition which is normally done to spread the company’s reach beyond the current domain. They are done to enhance the shareholder’s worth.

Under the process of a merger two companies mutually agree to become 1 legal entity to serve multiple purposes based upon the betterment of the business. Most of the time, the companies who are willing to do a merger are more or less similar. They may be similar in terms of customer base, size, structure, and scale of operations and are normally located in similar market segments or niches. 

On the contrary, acquisitions are different from mergers. The basic difference lies in the willingness or voluntary carrying on a process. An acquisition is normally not done voluntarily where one business actively takes up or buys another business or a company.

Mergers are mostly done to gain more market share and thus, the intent is to expand or grow beyond the existing situations. Furthermore, many companies merge with others to become market leaders and dominate the entire marketplace. Sometimes it is also done to reduce the costs and expenditures concerning the operations. The ultimate discussion of the merger depends upon the objective behind the action.

Many businesses indulge in this activity to expand over new territories and unite the common products. This increases overall revenues and profits and thus, this can also be one of the motives behind the merger. The ultimate benefits are enjoyed by the firm’s shareholders who enjoy the perks of the procedure.  Once the mergers take place the company or a business is distributed among the shareholders of both the two enterprises.

A merger is generally termed as a fusion of the two businesses into one single legal entity. There are various types of mergers including acquisitions, conglomerates, congeneric, vertical mergers, horizontal mergers, and market extensions.

A horizontal Merger is when the two companies operating in a similar industry and sector choose to operate together. They sell similar products but may operate in different markets.

A vertical merger is when two companies operating at various levels within one industry or supply chain combine their operations. It is done to enhance the synergies and cost-reductions

Congeneric is also called product extensions merger under which two or more businesses operating in a similar market or sector join hands. The two businesses become one under it.

Under conglomerates, two or more enterprises are mostly engaged in unrelated business activities. Moreover, the two companies that are merging into each other are not similar in size, structure, or nature of the operations being carried out.

In simple terms it can be described as the procedure where two unrelated or unfamiliar two or more enterprises who have nothing in common among them join hands in hands. On the contrary, a mixed conglomerate takes place between unrelated businesses but the motive behind is to gain the product or market share or even to extend the market through it.