What does the term "void-ab-initio" refer to in contract law?

The term "void-ab-initio" in contract law refers to an agreement that is null from the beginning. This means that the contract is considered invalid from the moment it was created and has no legal effect. Contracts that are void-ab-initio cannot be enforced by either party and are treated as if they never existed. This may occur due to a variety of reasons such as the incapacity of a party to enter into a contract, an illegal purpose, or lack of consideration.

The concept emphasizes that there is never any legal obligation arising from a void-ab-initio agreement, as opposed to contracts that may be valid but later rendered unenforceable due to certain circumstances. Thus, understanding this term is crucial in grasping the foundational aspects of contract validity and legality in business law.