Voidable Contract

Voidable Contract: Definition and Key Aspects

A voidable contract is a legal agreement between two parties that can be legally canceled by one or both parties under certain conditions. This type of contract is valid and enforceable until it is revoked or canceled by the party with the option to do so.

Key Characteristics

• Validity and Enforceability: A voidable contract is valid and enforceable unless one of the parties chooses to cancel it. Unlike a void contract, which is invalid from the start, a voidable contract can be enforced if both parties agree to continue following its terms.
• Grounds for Voidability: Common reasons for a contract being voidable include:
  • Coercion: When one party is forced into the agreement against their will.
  • Undue Influence: When one party is unfairly influenced by another.
  • Mental Incompetence: When a party lacks the mental capacity to enter into a contract.
  • Intoxication: When a party is under the influence of alcohol or drugs.
  • Misrepresentation or Fraud: When false information is used to induce a party into the contract.
• Ratification: A voidable contract can become binding if the defect is corrected and the affected party chooses to ratify the contract.

Examples

1. Real Estate Example: John buys a house from Mark with the condition that the house remains as it is. If Mark changes the house (e.g., converts a home gym back into a garage) without John's consent, John has the option to void the contract or keep it valid.
2. Minor's Contract: A contract entered into by a minor is often voidable. The minor can choose to avoid the contract during their minority status or for a reasonable time after reaching the age of majority.

In summary, a voidable contract provides flexibility by allowing one party to choose whether to enforce or cancel the agreement, depending on the circumstances under which it was made.