Definition of "Voidable contract"

Bob McGrath real estate agent
Bob McGrath, Real Estate Agent Key Realty

The first thing we have to understand about the voidable contract definition is that it is not the same thing as a void contract. A voidable contract can become a void contract if a court deems it void based on the terms or other legal reasons that make the contract unenforceable. 

A voidable contract is a type of formal agreement between two or more parties. While the voidable contract was signed, it can afterward be contested based on information that was withheld, hidden, or unknown by the parties involved in the contract.

What is a Voidable Contract?

As mentioned above, a voidable contract may be considered enforceable and legal when it is signed. At that point, the parties involved agreed on the terms mentioned in the contract, and nothing was out of order. However, if one or more of the parties involved encounters a defect within the contract or an attempted fraud through the contract’s specifications, the voidable contract can be brought in front of a judge and be rendered unenforceable or, in other words, void.

Some voidable contract examples that include reasons for a contract to be voidable are:

  • An illegal party entering into the contract;
  • Undue influence or manipulation;
  • Mistakes, misinterpretations, or fraud;
  • Withholding material facts;
  • Unconscionable terms;
  • A breach of contract.

Something to keep in mind, however, is that there are situations where the party could reject a contract and render it unenforceable and void through court but decides against it and goes through with the contract. In those situations, the contract remains valid and enforceable.

Voidable vs. Void Contract

When one or more parties would not have entered into a contract had they known the true nature of the contract, the contract becomes a voidable contract. The reason stated above, works as voidable contract examples as once the party is made aware or becomes aware of situations like that they can reject the contract after having signed it. Take here the voidable contract example of illegal parties. An individual that is a minor legally can not sign a contract without a parent or a guardian present. This situation can render the contract void.

In comparison, a void contract is unenforceable from the start. There is no situation in which a void contract is considered legal or enforceable. The reasons a contract is considered void from the start are agreements that are considered by nature illegal, if a party is incapable of understanding the terms, or if a party is inebriated, and so on.

 

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