What Does "Voidable" Mean?

Mary McMahon
Mary McMahon

A voidable contract is a valid legal contract which one of the parties can choose to repudiate, canceling the contract and ending the obligation to perform for both parties. It is important to distinguish between voidable and void, as the two terms mean different things. Void legal contracts are those which are invalid from the start; for example, a contract may include an illegal clause that invalidates it. Voidable contracts are legally binding, but only for one party. The other can choose to end the contract.

Marriage is a voidable contract that can be dissolved through a divorce.
Marriage is a voidable contract that can be dissolved through a divorce.

A number of different kinds of contracts are voidable by nature. In many nations, marriage is a common example, and in this case either party, rather than just one, can choose to end the legal relationship. The agreement remains valid until one person petitions to end it, in many regions through a no-fault system where the partners declare that they are no longer compatible and wish to separate.

Insurance policies are voidable contacts allowing motor vehicle insurance companies to drop coverage of a driver involved in multiple accidents.
Insurance policies are voidable contacts allowing motor vehicle insurance companies to drop coverage of a driver involved in multiple accidents.

Insurance contracts are also frequently voidable. Insurance companies can choose to repudiate a contract if they find evidence of fraud, the insured party fails to meet obligations, or he becomes a higher risk, as for example if a driver repeatedly gets into accidents and the insurance company decides to stop offering coverage. Likewise, insured parties can choose to stop paying for their insurance, voiding the contract by failing to fulfill their obligations.

When a contract is not voidable, it is legally binding until obligations are fulfilled. An example is a mortgage; the debtor must repay the loan with interest and fees. Failing to meet the obligations doesn't end the contract. Instead, it triggers a collection action, because the contract is still in force until the load is repaid. Choosing whether to structure a contract in a voidable way can be an important consideration, and it is important to read clauses carefully to understand what will happen if circumstances change and it is no longer possible to fulfill the terms of the contract.

In a voidable contract, the process for ending the agreement usually requires sending a notification to the other party to make her aware of the situation. Sometimes a court order is necessary to finalize the repudiation of the contract, as seen with a marriage. It is important to keep records so that in the event of a dispute, information about the end of the contract will be readily available, including detailed documentation showing that all parties were aware that the contract was ending by a given date.

All parties signing a contract must do so of their own free will.
All parties signing a contract must do so of their own free will.
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

You might also Like

Readers Also Love

Discussion Comments

manykitties2

@letshearit - I would say that it might work if it was an automatic renewal system on marriage, and you just had to pay a small fee to stop the renewal it might work better. I think that would make it easier for people who wanted to leave to get out, and the government would still get their cut of the money.

As far as divorces go, I think the whole thing is mostly a money grab and a way to tug children around. I think judges are there to work as highly paid mediators when things go really wrong. It's tough to say how long people should be forced to stay married though. I think that the voidable contract in this case works for a reason. If you want a void marriage you should be allowed to do it at any time.

letshearit

It is really interesting to me that marriage was given as an example of a voidable contract. Too many people these days I think are getting into marriage without really knowing what it entails, which results in our high divorce rate.

Do you think that the voidable clause should be changed to a need for renewal?

I think our nation would save a fortune in divorce fees if we just had to renew our marriage licenses every 5 years or so, much like we do with drivers licenses. For those that want out early - too bad - you have to work it out until your renewal period comes up.

Post your comments
Login:
Forgot password?
Register: