What characterizes a void contract?

A void contract is characterized by the fact that it lacks any legal effect from the moment it is created. This means that it is not enforceable by law, and both parties are released from their obligations under that contract. A contract may be deemed void for various reasons, such as being for an illegal purpose, lacking the essential elements of a valid contract (like consideration or mutual consent), or when one or both parties lack the capacity to contract.

In this context, the option stating that a void contract ceases to be enforceable by law accurately captures this critical characteristic. Unlike a voidable contract, which may be valid until one party chooses to affirm or void it, a void contract holds no validity or enforceability at any stage. Therefore, it creates no rights or obligations for the parties involved, as if it never existed.

The other options do not reflect the true nature of a void contract, as they imply some level of enforceability or valid standing, which is contrary to the definition of a void contract.