What does Void ab Initio mean?

A contract that is void ab initio is treated as if it never existed. It isn't canceled from today; it's erased from the start, which is what the Latin phrase "void from the beginning" means.

The label matters because dead contracts come in tiers. A terminated contract was valid and then ended, so everything done under it stands. A voidable contract is valid until one party chooses to undo it. Void ab initio is different: the contract never legally formed, so no rights or duties ever came out of it, with common causes being a signer who had no authority to bind the company, illegal subject matter, or a party lacking legal capacity. The consequences follow from that, since you cannot sue for breach of a contract that never existed, so instead of damages the court unwinds the deal and returns money and property that changed hands. The practical lesson sits in the signature block, because a deal signed by someone without power to bind their company may be worth nothing at all.

Annulment versus divorce. A divorce ends a marriage that existed, while an annulment declares the marriage never legally happened at all. Void ab initio is the annulment of contracts.