A voidable contract is one that may be legally declared void, or invalid, by a party to the contract. A contract may be declared void due to a variety of reasons, such as one party being under the age of majority, one party being mentally incapacitated, misrepresentation, or fraud. In general, a voidable contract can be enforced by one party and/or voided by the other party.
Examining Examples of Voidable Contracts
One example of a voidable contract could be if a young teen agrees to a service contract with a cell phone provider. In this case, the teen is not considered a legally competent party, due to their age and can thus void the contract. Another example could be a contract in which one party has included false information by committing fraud. In this case, the party with the false information can be held liable for any losses sustained by the other party because of the false information.
Understanding Void Versus Voidable Contracts
It’s important to understand the difference between a void contract and a voidable contract, as the two are often confused. A void contract is one that is rendered completely invalid from the outset. For example, a contract between two parties to commit a criminal offense would be void because it violates the law. A voidable contract, on the other hand, is valid until one of the parties chooses to void it.
Wrapping Up Voidable Contracts
In summary, a voidable contract is a contract that is valid until one of the parties chooses to void it. This type of contract is usually voided due to one of the parties being legally incompetent or due to misrepresentation or fraud on one side. It is important to understand the difference between a void contract and a voidable contract in order to make sure that all parties involved are fully aware of the terms of the agreement.