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What is a Voidable Contract?

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  • Written By: Charity Delich
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 November 2016
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A voidable contract is an agreement entered into by two or more parties that can be declared invalid by one of the parties for a legal reason. Usually, only one of the parties has the right to cancel the contract. Until that party voids the contract, it remains valid and binding on all of the parties. Instead of voiding the contract, the party who is allowed to void it also has the option to affirm the contract. When affirmation occurs, the contract becomes valid, and the entitled party no longer has a right to void it.

For example, suppose that John sells Suzy a car for $2,000 US Dollars (USD) a month before Suzy turns 18 and becomes an adult. This contract would be an example of a voidable contract because a legal defect exists – minors generally cannot enter into legal contracts. Even though a defect is present, the contract would remain legally binding on both parties until Suzy rejects it. If she rejects it, John does not have a remedy. If Suzy turns 18 and then agrees to pay the $2,000 for the car, then the contract becomes ratified and Suzy would lose her right to cancel the contract.

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Contracts can become voidable if fraud, misrepresentation, or mistake occurs. Voidable contracts also include those entered into by a person who lacks capacity or by a person who entered into the contract under duress or undue influence. In addition, a voidable contract may occur in a situation where one of the contracting parties is a fiduciary and abuses his or her power in that role. In these situations, the contract is not annulled until the party who has legal grounds to cancel the contract formally invalidates it. Alternatively, the party can elect to ratify the contract, in which case it becomes an enforceable contract.

Generally, an agreement entered into by a minor is a voidable contract. In most jurisdictions, if a minor or an incompetent person gets married, the marriage is voidable. A minor may elect to obtain an annulment of the marriage or to affirm the marriage once the minor is of legal age. In the case of an incompetent person, the person may affirm the marriage if he or she becomes competent.

A voidable contract is different from a void contract. Void contracts are contracts that cannot be legally enforced on the parties. If two parties enter into an agreement to perform an illegal action, for instance, the contract would be considered a void contract. A contract can also become a void contract if performance of the duties in the contract becomes impossible.

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anon335937
Post 6

I signed a contract to buy a spa with a cover opener. When the spa was delivered, they had crossed out the cover opener included and circled no cover opener. My copy of the contract has opener circled. Am I within my rights to void this contract? I am in Texas.

anon331793
Post 5

Because his car had been badly damaged in an accident, David decided to rent a car from Budget until his own vehicle had been repaired. On 1 February, he concluded a contract with Budget where he rented a small car of a particular make for a period of three weeks for R3500. As this particular car was not immediately available, the parties agreed that David would collect the car on 3 February.

During the night of 2 February, this car was stolen by a gang of car thieves from the Budget premises, with the result that Budget could not make it available to David when we came to collect it the following day. If David arranged for the car to be stolen, is this contract voidable? And explain why?

anon311404
Post 4

I signed a contract for a pension with the company's representative. When he left my home he put his insurance number on it, making him the beneficiary if I died. Does this sound like fraud?

sapphire12
Post 3

The other side of the fact that minors' contracts are voidable, of course, is that people who enter into contracts with the minors can also try to void them if they change their minds, even if nothing is going wrong with the deal. This can make entering into a contract as a minor very risky.

watson42
Post 2

@anon150783, I think you need to get yourself a good lawyer. While I would say contract became void, it might also be that you should have intervened earlier in the process to make sure everyone was aware of changes, and could cancel if they chose to do so.

anon150783
Post 1

I entered into a contract with a client to build a deck. An architect had drawn the plans per the client. When construction started, the deck was changed in style and the shape creating more materials.

The original contract was signed per the drawn plans at a set cost. Now that she changed the design during construction, doesn't that also mean that the contract becomes void and that she becomes responsible for material costs not me? I managed this project with no markup for a friend and I'm now being sued for the difference in costs. She is the one who paid all costs during construction. Please advise.

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