A contract is a legally binding agreement between two or more parties. However, not all contracts are created equal. Some contracts are void or voidable, which means that they have no legal force or effect.
Understanding the difference between void and voidable contracts is important for any business owner or individual who enters into contracts on a regular basis. This article will explore the differences between void and voidable contracts, and provide examples of each.
Void Contracts
A void contract is a contract that is completely unenforceable from the beginning. This means that the contract was never legally binding, and therefore cannot be enforced by law.
There are several reasons why a contract may be considered void. For example, a contract may be void if:
– The contract is illegal. For example, a contract to sell illegal drugs would be void.
– One of the parties lacked capacity to enter into the contract. For example, a contract entered into by a minor could be void.
– The contract was entered into under duress or coercion. For example, a contract entered into at gunpoint would be void.
Voidable Contracts
In contrast, a voidable contract is a contract that may be legally binding, but is able to be voided by one or more of the parties involved. This means that the contract is initially enforceable, but can be canceled at the discretion of one or more parties.
There are several reasons why a contract may be considered voidable. For example, a contract may be voidable if:
– One of the parties was under a mistake or misrepresentation at the time of entering into the contract. For example, a contract to buy a car may be voidable if the seller misrepresented the condition of the car.
– One of the parties lacked capacity to enter into the contract. For example, a contract entered into by someone who was intoxicated could be voidable.
– The contract was entered into under undue influence. For example, a contract entered into by an elderly person who was pressured by a caretaker could be voidable.
Examples of Void and Voidable Contracts
Here are some examples to better illustrate the differences between void and voidable contracts:
– A contract to commit a crime would be void, as it is illegal.
– A contract to sell a car to a minor would be voidable, as the minor lacks capacity to enter into the contract.
– A contract to sell a house that was built on a toxic waste site would be voidable, as the buyer may not have had all of the information necessary to make an informed decision.
– A contract to purchase a car that was advertised as having low mileage, but actually had high mileage, would be voidable, as the buyer was under a misrepresentation.
In conclusion, it is important to understand the differences between void and voidable contracts when entering into contractual agreements. Understanding the nuances of contract law can help protect individuals and businesses from entering into agreements that may not be legally binding.
