Ab initio

Ab initio is a Latin term, meaning: “from the beginning”. It refers to something being the case from the start, or from the instant a certain act was performed.

In the context of contract law, a contract may be “void ab initio”. This means that the contract must be treated as invalid from the moment that it was entered into, rather than when the court made a decision on the matter. The effect of a contract being void ab initio is that the contract has no binding power over any of the parties.

A circumstance that may render a contract void ab initio is when a contract is invalid due to common mistake of a material fact or for duress.

For example, if a policy holder deceived an insurer about a relevant material fact when purchasing the policy, the insurance contract may be deemed void ab initio.