Voidable Contract vs. Void Contract: An Overview

In business law, a contract is a legally binding agreement between two or more parties. However, not all contracts are created equal. Some contracts are voidable, while others are void. Understanding the difference between voidable contract and void contract is crucial in determining the legal obligations and consequences of each.

Void Contract

A void contract is a contract that is considered invalid from the beginning, meaning that it has no legal effect. A void contract is usually unenforceable and cannot be enforced by either party. The contract is deemed void if it involves an illegal object or purpose, or if it is against public policy. Examples of void contracts include:

• Contracts with minors (under 18 years old)

• Contracts that involve an illegal activity or purpose

• Contracts that are against public policy

• Contracts that involve fraud, misrepresentation, or duress

Voidable Contract

A voidable contract, on the other hand, is a contract that is considered valid until one party decides to void it. A voidable contract can be enforced by either party, but one party has the option to cancel the contract due to certain circumstances. The contract is deemed voidable if there is a lack of capacity, fraud, undue influence, or mistake. Examples of voidable contracts include:

• Contracts with individuals who lack the capacity to enter into a contract, such as minors or individuals who are mentally incapacitated

• Contracts that are entered into under duress or undue influence

• Contracts that involve fraud or misrepresentation

Key Differences

The main difference between a void contract and a voidable contract lies in their enforceability. A void contract is considered invalid from the beginning, and therefore cannot be enforced by either party. A voidable contract, on the other hand, is considered valid until it is voided by one of the parties. Additionally, a void contract is considered to have never existed, while a voidable contract can be enforced until it is voided.

Another key difference is the circumstances that lead to the contracts being void or voidable. A void contract is deemed invalid if it involves an illegal object or purpose, or if it is against public policy. A voidable contract, on the other hand, is deemed valid until one party decides to void it due to a lack of capacity, fraud, undue influence, or mistake.

Conclusion

In conclusion, understanding the difference between voidable contract and void contract is crucial in determining the legal obligations and consequences of each. A void contract is considered invalid from the beginning and cannot be enforced by either party, while a voidable contract is considered valid until one party decides to void it.