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Void vs. Voidable Contracts: Understanding the Differences, Legal Implications, and Real-World Examples

Contracts are the backbone of many transactions, from business deals to personal agreements. They establish the terms and conditions under which parties agree to operate. However, not all contracts are created equal. Some contracts may be declared “void” or “voidable,” depending on certain legal criteria. Understanding the difference between void and voidable contracts is crucial to ensure that your agreements are enforceable and to avoid potential legal pitfalls. This article will explore these two types of contracts in depth, examining their key differences, legal implications, and real-world examples.

Defining Void Contracts

A void contract is a contract that lacks legal validity from the outset. It is unenforceable by law, meaning that neither party can rely on its terms or seek enforcement through legal remedies. In essence, a void contract is not a contract at all—it’s considered null from its inception, and it holds no legal weight. Contracts can be void for various reasons, including illegal subject matter, lack of consideration, or incapacity of one or more parties.

Read More: How to Write a Contract

Key Characteristics of Void Contracts

• No legal effect: A void contract is treated as though it never existed, meaning the parties involved cannot be held to its terms.
• Involves illegal or impossible terms: If the contract involves illegal activity or impossible performance, it is automatically considered void.
• No remedy: Since the contract is not legally enforceable, the courts will not grant any remedies to the parties involved.

Common Reasons for Void Contracts

• Illegal Subject Matter: A contract that involves activities that are illegal (e.g., drug dealing, illegal gambling) is automatically void. Courts will not enforce agreements based on illegal activities.
• Incapacity of Parties: If one of the parties lacks the capacity to enter into a contract—such as a minor or someone who is mentally incompetent—the contract is void.
• Lack of Consideration: For a contract to be legally binding, both parties must provide something of value (consideration). If there is no exchange of consideration, the contract may be considered void.

Read More: How to Handle Contract Terminations 

Defining Voidable Contracts

A voidable contract, on the other hand, is a valid contract that one or both parties may choose to void under certain circumstances. Unlike a void contract, a voidable contract is legally enforceable until one party decides to void it. The key difference lies in the fact that voidable contracts are considered valid and enforceable unless and until they are voided.

Key Characteristics of Voidable Contracts:

• Valid until voided: The contract remains in effect and enforceable until one party exercises their right to void it.
• Grounds for voiding: Voidable contracts typically involve some defect in the formation process, such as fraud, misrepresentation, undue influence, or duress.
• Remedies available: If the contract is voided, the party who voids it may seek legal remedies, such as rescission (cancellation) or damages.

Read More: Common Contract Clauses

Common Reasons for Voidable Contracts

• Misrepresentation or Fraud: If one party has misrepresented key facts or engaged in fraud to induce the other party into the contract, the wronged party can choose to void the contract.
• Duress or Undue Influence: A contract entered into under duress (i.e., threats) or undue influence (i.e., manipulation) is voidable at the discretion of the affected party.
• Mistake: If both parties are mistaken about a fundamental fact in the contract, one or both parties may void it.
• Lack of Free Consent: A contract where consent is not freely given (e.g., under coercion) is considered voidable.

Read More: Addendum vs. Amendment

Key Differences Between Void and Voidable Contracts

While void and voidable contracts may seem similar at first glance, they are fundamentally different in their legal status and consequences.

Legal Consequences of Void Contracts

Void contracts have no legal standing, and therefore, they do not carry any legal consequences for either party. Courts treat them as if they never existed. This means that neither party can claim damages or seek enforcement of any terms contained in the contract.

Example of a Void Contract:

Imagine two parties enter into a contract to sell illegal drugs. This contract is void from the beginning because the subject matter is illegal. Even if one party fails to deliver the drugs, the other cannot sue for breach of contract because the agreement itself is not enforceable.

Legal Consequences of Voidable Contracts

Voidable contracts are legally enforceable until they are voided by one party. If a party chooses to void the contract, they are typically entitled to seek remedies. The remedies depend on the grounds for voiding the contract but may include rescission, restitution, or damages.

Example of a Voidable Contract:

Consider a scenario where a person enters into a contract to purchase a car, but the seller has misrepresented the car’s condition. Once the buyer discovers the fraud, they have the option to void the contract. If they choose to void it, they can return the car and seek reimbursement for the amount paid, or they may sue for damages.

Read More: Warranties vs. Representations in Contracts

Real-World Examples of Void Contracts

To further clarify the concept of void contracts, let’s look at a few real-world scenarios:

Example 1: Illegal Contract

A contract for the sale of prohibited drugs would be considered void because it involves illegal activities. Even if the parties agree and perform their respective duties under the contract, the law does not recognize such an agreement, and no party can sue for breach if the other fails to perform.

Example 2: Contract to Commit a Crime

An agreement between two individuals to commit a crime (e.g., robbery) is void. Since the subject matter of the contract is illegal, the contract is null from the outset, and neither party can seek legal enforcement.

Example 3: Contract Without Consideration

If Party A promises to give Party B a gift without expecting anything in return, there is no consideration, and the contract may be considered void. A contract requires an exchange of value, and without that, it lacks legal validity.

Real-World Examples of Voidable Contracts

Voidable contracts arise in many real-world situations where one party has been unfairly influenced or misled during the formation of the contract.

Example 1: Fraud or Misrepresentation

If a person buys a house based on the seller’s fraudulent misrepresentation about the property’s condition, the buyer may later discover that significant defects were concealed. In this case, the buyer has the right to void the contract, as it was entered into under false pretenses.

Example 2: Contract Signed Under Duress

A business owner signs a contract with a supplier after being threatened by a competitor to do so. This contract is voidable at the business owner’s discretion because they entered into the agreement under duress. They can choose to void the contract if they prove that their consent was not freely given.

Example 3: Minor’s Contracts

In many jurisdictions, contracts entered into by minors (people under the age of 18) are voidable at the minor’s discretion. For example, if a minor signs a contract to purchase a car, they may later decide to void the contract, as they lacked the legal capacity to enter into the agreement.

Legal Remedies in Void and Voidable Contracts

When dealing with void and voidable contracts, it’s essential to understand the legal remedies available to the parties involved.

Remedies for Void Contracts:

Since a void contract is considered null from the beginning, no legal remedies are available for either party. The courts will not enforce any terms of a void contract, and neither party can claim damages for non-performance.

Remedies for Voidable Contracts:

In contrast, voidable contracts provide the wronged party with certain remedies if they choose to void the agreement. These remedies may include:

• Rescission: The court can cancel the contract, releasing both parties from their obligations.
• Restitution: The court may require the wronged party to return any benefits they received under the contract.
• Damages: The wronged party may be entitled to compensation for losses incurred due to the voidable contract.

Impact of Void and Voidable Contracts on Businesses

For businesses, understanding the distinction between void and voidable contracts is vital to managing risk and avoiding costly legal disputes. Contracts that are void or voidable can lead to significant financial and reputational damage if not handled properly.

Void Contracts in Business:

Companies must ensure that all contracts they enter into are legally valid and enforceable. Void contracts can result in wasted time and resources, as the business cannot enforce the terms or seek legal remedies.

Voidable Contracts in Business:

Businesses may encounter voidable contracts if they inadvertently engage in fraud, misrepresentation, or other improper behavior during the contract formation process. Such contracts can lead to legal disputes, as the wronged party may choose to void the agreement and seek damages. Businesses must be aware of the risks and ensure that all contracts are formed in good faith to avoid potential voidable situations.

Read More: What is Contract Compliance

Understanding the differences between void and voidable contracts is essential for anyone involved in contract negotiations or business transactions. While both types of contracts may seem similar at first glance, their legal implications are vastly different. Void contracts are null from the outset and hold no legal weight, while voidable contracts remain enforceable unless one party decides to void them.

By being aware of the characteristics, legal consequences, and remedies associated with void and voidable contracts, individuals and businesses can better navigate the complexities of contract law and protect their interests. Whether you are drafting a new agreement or reviewing an existing one, ensuring the validity of your contracts is crucial to avoid disputes and potential legal issues.

FAQs on Void vs. Voidable Contracts

What is the difference between a void and a voidable contract.

A void contract is one that is legally unenforceable from the outset, meaning it has no legal effect and is treated as if it never existed. A voidable contract, on the other hand, is initially valid and enforceable but can be voided by one of the parties if certain conditions, such as fraud or misrepresentation, are met.

What makes a contract void?

A contract is considered void if it involves illegal activities, lacks consideration, or if one of the parties lacks the legal capacity to enter into a contract (e.g., a minor or a mentally incompetent person). Additionally, contracts that are impossible to perform may also be considered void.

What are the common reasons a contract is voidable?

Common reasons for a contract being voidable include fraud, misrepresentation, undue influence, duress, and mistakes made during the formation of the contract. Additionally, contracts entered into by minors are often voidable at the minor's discretion.

Can a void contract be enforced in court?

No, a void contract cannot be enforced in court. Since it is considered legally invalid from the beginning, the courts treat it as though it never existed, meaning no legal remedies can be sought for its breach.

What happens when a contract is voidable?

A voidable contract remains valid and enforceable unless one of the parties decides to void it. If the contract is voided, the parties are no longer bound by its terms, and the wronged party may seek remedies such as rescission or damages.

Can both parties void a voidable contract?

Typically, only the party who has been wronged or disadvantaged in the contract formation (e.g., due to fraud, misrepresentation, or duress) has the right to void a voidable contract. The other party is usually bound by the terms unless the affected party chooses to void it.

Can a voidable contract be ratified?

Yes, a voidable contract can be ratified. This happens when the party with the right to void the contract decides to confirm and accept the terms, often after discovering any defects such as fraud or duress. By ratifying the contract, the party waives their right to void it in the future.

What are the legal remedies available for a voidable contract?

Legal remedies for a voidable contract include rescission, which cancels the contract and returns the parties to their pre-contract positions, restitution, which requires the return of any benefits exchanged, and damages, which compensate the wronged party for losses incurred.

Are contracts entered into by minors always voidable?

Yes, in most jurisdictions, contracts entered into by minors are considered voidable. The minor has the right to void the contract before reaching the age of majority or within a reasonable time afterward. However, there are some exceptions, such as contracts for essential goods or services, which may not be voidable.

What is the impact of a void or voidable contract on business transactions?

For businesses, void contracts result in wasted time, resources, and possible legal complications, as they cannot enforce the contract terms. Voidable contracts pose the risk of being invalidated by the other party, leading to potential financial loss or reputational damage. It’s crucial for businesses to ensure the legality and fairness of their contracts to avoid these issues.

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Voidable Contract

Jump to section, what is a voidable contract.

A voidable contract is an agreement between two parties that can be legally canceled by one or both parties under certain conditions.

The rationale behind voidable contracts is to allow courts to weigh the fairness of a contract based on the circumstances under which it was made. This will enable them to determine whether a party had been unfairly manipulated or coerced into signing a contract they otherwise would not have agreed to under normal circumstances.

What Does Voidable Mean?

Voidable is a term used to describe a contract or other legal document that, although valid, may be voided by one of the parties, but only if that party chooses to do so.

The term voidable is often confused with "void" — and indeed, these two terms are very similar — but there is a crucial difference between them. A contract or other legal document that is void cannot be enforced in court. A void contract is unenforceable because it violates a statute or public policy.

On the other hand, a voidable document can be enforced if both parties agree to continue following its terms.

A voidable contract is an otherwise valid and enforceable agreement. It provides that one or more of its terms may be disregarded at the option of one party to the agreement (i.e., it may be voided).

In such a case, the party who does not want to comply with a contract term can choose not to do so but cannot compel performance from the other party under that term.

In some cases, however, the party whom a voidable contract has wronged will allow the contract to continue in force and effect. This could be because the contract terms offer some advantage to that party. It may also be because the party who breached the contract has promised restitution or additional compensation to make up for any losses suffered from the breach.

Examples of Voidable Contracts

An example of a voidable contract is a contract that involves a minor. Sometimes children enter into contracts that they don't fully understand.

For example, you may have gone to a summer camp during your youth and signed a waiver releasing the camp from liability for any injuries you received while at camp. However, you probably didn't understand the document you were signing as a child. Therefore the contract may be voidable.

A similar situation occurs when someone with mental disabilities enters into a contract. In some cases, people suffering from mental health problems are not considered capable of understanding what they are agreeing to. As a result, they may not realize that they are entering into a contract. This makes such contracts voidable by either party after the fact.

Another example of a voidable contract is if you buy life insurance from an agent who tells you that your new policy will automatically transfer to your children when you die. But your children are not listed as beneficiaries on your policy and are not even eligible for coverage under your policy based on its terms. Then you could sue to have your contract voided.

What Causes a Contract to be Voidable?

Misrepresentation of a contract.

Misrepresentation is a false statement that misleads another party into agreeing to a contract. The misrepresentation must be important enough to induce a reasonable person to sign the contract.

For example, if you are selling your house under disclosures and represent that you have maintained the furnace properly. If you know the furnace is on its last legs, this would probably be grounds for voiding the contract. However, an opinion such as saying your house is "beautiful" would not constitute misrepresentation because it's just an opinion.

A contract signed under duress

Duress occurs when one party forces another party into signing a contract through either physical force or psychological pressure.

A contract is considered to be signed under duress if, for instance, a person is forced to enter into a contract by means of an illegal threat.

For example, if one party threatens to burn down another party's house unless they sign a contract, that contract would likely be voided because it was entered into under duress.

However, this rule has some exceptions depending on state law and the type of threat involved.

Undue influence is similar but applies more to situations where someone uses their power over another person to force them into signing a contract against their will.

There was a mistake in the contract signing process

If both parties have misunderstood a fact during a contract negotiation (for example, if one party misunderstands that they will be traveling out of state as part of their new job when hired), that contract can be called off.

Also, suppose both parties make an innocent mistake about the same material fact of the agreement. In that case, it's possible to have the contract voided. However, the mistake must be one that would cause a reasonable person not to sign the contract.

There is a breach of the agreement

One party breached a duty owed to the other party in connection with the formation of the contract – called a breach of contract . If one party fails to uphold their end of the deal, the other party is excused from performing their duties under the terms of the agreement.

Incapacity to understand, sign, and uphold a contract

If one or both parties did not have the mental capacity to understand the terms and conditions of the agreement, perhaps due to intoxication or mental illness, the contract is considered voidable. The same case applies if one party becomes incapable of performing his obligations under the contract due to death, mental incapacity, or bankruptcy.

Voidable Contract in Real Estate

Contracts are everywhere in the real estate world, from purchase and sales agreements to lease agreements . Some of these agreements are voidable because they have not fulfilled conditions or contain terms that cannot be enforced under state law.

The most common example of a voidable contract in real estate is a contract for the sale of a home where the buyer has not met all conditions spelled out in the purchase and sale agreement. For example, suppose the buyer fails to secure financing despite a good faith effort. In that case, the purchase and sale agreement is no longer valid.

For example, if you agree to buy a house for $500,000 with no contingency for financing but later find out you can't obtain a loan, you may be able to back out of the deal and not lose your deposit. This is because most contracts contain language stating the buyer can cancel if he doesn't obtain financing within a certain time frame — usually 30 days from when the contract becomes binding.

You might want to back out of a real estate deal because of defects found during the inspection. Most contracts contain a clause that the seller must repair problems during the inspection period. If the seller refuses or the issues are extensive, you may decide it's not worth buying. As a result, you may find yourself retracting away from the contract, creating a voidable contract.

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Voidable Contract

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Table Of Contents

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What Is a Voidable Contract?

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Voidable vs. Void Contracts

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Voidable Contract: Definition, How It Works, and Examples

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

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A voidable contract is a formal agreement between two parties that may be rendered unenforceable for any number of legal reasons, which may include:

• Failure by one or both parties to disclose a material fact
• A mistake, misrepresentation, or fraud
• Undue influence or duress
• One party's legal incapacity to enter a contract (e.g., being a minor)
• One or more terms that are unconscionable
• A breach of contract

The legal right to void such a contract is known as disaffirmance .

Key Takeaways

• A voidable contract is one that can be canceled or altered for qualified legal reasons.
• Not all contracts are voidable; legal precedent must exist to absolve responsibility.
• Finding a defect in a contract is a common way to void that contract.
• The simplest way to void a contract is for both parties to agree that voiding is the best option.

How Voidable Contracts Work

A voidable contract is initially considered a legal and enforceable document. However, it can be rejected by one party if the contract is discovered to have defects. If a party with the power to reject the contract chooses not to reject the contract despite the defect, the contract remains valid and enforceable.

Most often, only one of the parties is adversely affected by agreeing to a voidable contract. This may happen because, for example, that party fails to recognize a misrepresentation or fraud made by the other party.

The simplest way for a contract to be voided is for both parties to agree that it's the best option moving forward. They may choose to dissolve the relationship outlined in the contract entirely, or they may choose to correct the contract.

A contract that is deemed voidable can be corrected through the process of ratification. Contract ratification requires all involved parties to agree to new terms that effectively remove the initial point of contention that was present in the original contract.

For example, if one of the parties was not capable of entering into a legally enforceable contract when the original was approved, that party can choose to ratify the contract when they are deemed legally capable.

A voidable contract occurs when one of the involved parties would not have agreed to the contract originally if they had known the true nature of all of the elements of the contract prior to original acceptance. With the presentation of new knowledge, the aforementioned party has the opportunity to reject the contract after the fact. Alternatively, a contract is voidable when one or both parties were not legally capable of entering into the agreement—for example, when one party is a minor.

In contrast, a void contract is inherently unenforceable. A contract may be deemed void should the terms require one or both parties to participate in an illegal act, or if a party becomes incapable of meeting the terms as set forth, such as in the event of one party’s death.

A contract may be ruled null and void should the terms require one or both parties to participate in an illegal act, or if one party becomes incapable of meeting the contract terms.

Examples of Potentially Voidable Contracts

Certain smartphone apps, categorized as freemium apps, begin as free downloads but later allow for in-app purchases costing real money. Freemium apps geared toward children may result in a minor accepting the terms and conditions associated with gameplay, though these terms may allow for the later solicitation of in-app purchases. This type of activity led to a lawsuit against Apple in 2012, which suggested the transactions were part of a voidable contract.

In a more recent example, a 2018 New Mexico lawsuit alleged that solar power installer Vivint Solar defrauded customers by binding them to 20-year contracts that required consumers to purchase the electricity generated by solar systems placed on their homes at rates that increase by more than 72% during the 20-year period. The lawsuit sought to render all Vivint's prior contracts with homeowners as voidable if affected customers wanted to cancel them. However, that was not included in a settlement agreement between the New Mexico attorney general and Vivint in May 2021.

What Is Disaffirmance?

Disaffirmance is the right to renounce a contract that you have agreed to participate in. To disaffirm a contract, you must indicate that you won't be bound by its terms. This can be done directly, for example in writing, or indirectly, for example by not performing the duties outlined in the contract. Someone who can prove that they lacked the legal capacity to enter a binding contract, such as minors, can disaffirm a contract.

What Is a Void Contract?

A void contract is one that is unenforceable from the moment it is created. Due to how it was written or the terms outlined in it, a void contract was never legally valid. A contract may be void if it is found that one of the parties was incapable of fully understanding its implications or was a minor when it was signed. Contracts involving illegal activity are also void.

What Are Reasons a Contract Is Voidable?

A contract may be voidable for qualified legal reasons. These can include a failure to disclose a material fact by one party or the other; a misrepresentation or mistake in the contract; fraud; terms that are unconscionable; or a breach of contract. A contract may also be voidable if one party lacked the legal capacity to enter the contract at the time it was signed.

A voidable contract is a contract that can be canceled by either participating party for qualified legal reasons. The parties may also choose to amend or correct the contract instead of canceling it. Qualified reasons include failure to include material facts, mistakes, misrepresentations, or a breach of contract. A contract may also be voidable if one of the parties was not legally qualified to participate; for example, if one party was a minor at the time of signing.

This is different from a void contract. A voidable contract is legal until one of the parties seeks to challenge, cancel, or amend it on qualified legal grounds. A void is inherently unenforceable. An example of a void contract would be one that requires the parties to participate in illegal activity.

CaseText. " In Re Apple in-App Purchase Litigation, Case No. 5-11-CV-1758 EJD ."

New Mexico Attorney General's Office. " AG Balderas Sues Massive Solar Company for Defrauding New Mexicans & Jeopardizing Their Home Ownership ."

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What is a voidable contract? A comprehensive guide

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Relationships, both professional and personal, can greatly benefit from contracts.

They specify the conditions of an agreement or deal between two or more parties.

Contracts are meant to be binding, but sometimes unforeseen events call for the termination or voiding of the agreement.

This guide will discuss what voidable contracts are, the circumstances that render them voidable, and some examples.

Key takeaways

• Voidable contracts allow the parties to legally terminate the agreement under certain conditions.
• Miscommunication, undue influence, minimal mental incompetence, and coercion are all factors that can lead to such contracts being signed.
• Ratification can validate voidable contracts. It occurs when one or both parties to a voidable contract, who had the option to void it, agree to validate it.

What is a voidable contract?

A simple definition of a voidable contract is an agreement between two parties that one or both parties can legally cancel.

The idea behind voidable contracts is to give courts the ability to assess a contract’s fairness in light of the circumstances surrounding its formation.

They will be able to tell if someone was unfairly forced or coerced into signing a contract that they would not have in a normal situation.

Void vs. voidable contract: What’s the difference?

Understanding the difference between void and voidable contracts is crucial for anyone navigating the complex landscape of contracts.

Void contracts

A void contract is a contract that is fundamentally flawed from the outset and is considered legally invalid.

Such contracts lack the essential elements required for a valid contract, rendering them null and void.

Enforceability

Void contracts are unenforceable in a court of law.

This means that if contract disputes arise, neither party can legally compel the other to fulfill their obligations under the contract.

Common examples of void contracts include agreements that involve illegal activities, contracts with minors (in some jurisdictions), contracts obtained through fraud, and contracts with a purpose contrary to public policy.

Voidable contracts

A voidable contract, on the other hand, is a contract that appears valid on the surface but contains elements that make it susceptible to being canceled or voided.

One or both parties have the option to either affirm the contract or void it.

A voidable contract is still enforceable and legally binding until one of the parties decides to void it. If one party chooses to void it, the contract becomes null and void.

Voidable contracts often arise due to issues like misrepresentation, undue influence, coercion, or a party’s incapacity to consent.

For instance, a contract signed under duress or with false information may be voidable.

Key differences:

The primary distinction is that void contracts are inherently invalid and lack the essential elements of a contract.

In contrast, voidable contracts are initially valid but contain defects that make them vulnerable to cancellation.

Void contracts are unenforceable from the beginning, whereas voidable contracts are enforceable until one of the parties exercises their right to void the contract.

Reasons for voidance

Void contracts are void due to their fundamental flaws, such as illegality or incapacity.

Voidable contracts are voided because of specific defects, such as misrepresentation or coercion.

When is a contract voidable?

You might be wondering what makes a contract voidable.

A contract becomes voidable when certain specific circumstances or defects exist that give one or both parties the option to cancel or void the contract.

These circumstances or defects can undermine the voluntary and informed consent of one of the parties, rendering the contract potentially unfair or unjust.

Here are some common situations when a contract may be considered voidable:

Misrepresentation or fraud

If one party makes false statements or misrepresents essential facts that induce the other party to enter into the contract, the deceived party may have the right to void the contract.

This typically involves a material misrepresentation, meaning a false statement that significantly influenced the decision to enter into the contract.

Duress or coercion

When one party is forced, threatened, or pressured into signing the contract against their will, the contract may be voidable.

Duress or coercion undermines the voluntary nature of the agreement.

Undue influence

If one party has significant power or influence over the other, and this influence is used to compel the weaker party to enter into the contract, it can render the contract voidable.

Undue influence often occurs in situations involving relationships of trust, such as between family members, caregivers, or legal guardians.

Lack of capacity

Contracts may be voidable if one of the parties lacks the mental capacity, legal competence, or understanding to enter into a contract.

This could involve individuals who are minors, mentally incapacitated, intoxicated, or suffering from a cognitive impairment.

Unconscionable terms

When the terms of a contract are so one-sided, unfair, or oppressive that they shock the conscience, a court may consider the contract voidable.

Such terms can include exorbitant fees, hidden clauses, or terms that heavily favor one party over the other.

In cases where both parties make a genuine mistake about a fundamental aspect of the contract, it may be voidable.

This often involves a mutual misunderstanding or a material misunderstanding of the contract’s terms.

It’s important to note that the party seeking to void the contract must take action promptly upon discovering the issue.

Delay in asserting the right to void the contract may result in a waiver of that right.

Additionally, the specific legal requirements may vary by jurisdiction, so it’s advisable to seek legal advice when encountering such situations to ensure compliance with local laws and regulations.

Voidable contract examples

Here are some real-life examples of voidable contracts to further illustrate the concept:

Example 1. Contract under duress

Imagine Sarah signs a contract with a construction company to renovate her home.

However, the construction company’s representative uses aggressive and threatening tactics and complex contract terminology to force Sarah into signing the contract.

Sarah feels she has no choice but to agree due to the duress exerted on her.

In this case, Sarah may have the option to void the contract because it was entered into under duress.

Example 2. Misrepresentation of product quality

John purchases a used car from a dealership based on the dealer’s representation that the vehicle has low mileage and has never been in an accident.

After a few weeks, John discovers that the car’s odometer had been rolled back and a previous accident wasn’t disclosed.

The misrepresentation of the car’s condition could make the contract voidable, and John might have the choice to cancel the contract .

Example 3. Contract with a minor

A bicycle shop sells a high-end bicycle to a teenager without realizing that the buyer is under the legal age of majority.

Later, the teenager decides they no longer want the bicycle and returns it to the shop.

Because minors typically lack the legal capacity to enter into binding contracts, the bicycle shop’s standardized contracts may be voidable at the discretion of the minor.

Example 4. Undue influence in a will

An elderly individual, Susan, creates a will, leaving her entire estate to her caregiver, Lisa.

Susan’s family becomes concerned that Lisa manipulated Susan into changing her will to benefit her unfairly.

If it can be proven that Lisa exercised undue influence over Susan in creating the will, it may be deemed voidable, and Susan’s previous will could be reinstated.

In each example of a voidable contract above, the contract is potentially voidable due to specific circumstances or defects that raise questions about the parties’ voluntary consent or fairness.

Voidable contracts provide a legal mechanism for parties to address situations where they may have been unfairly coerced, misled, or taken advantage of during the contract formation process.

How to void a contract

Voiding a contract is a legal process that typically involves specific steps and considerations.

The ability to void a contract depends on the circumstances and the grounds for voiding it.

Here is a general guide on how to void a contract:

Review the contract

Carefully examine the contract to identify any defects or exemption clauses that may make it voidable.

Determine the specific grounds for voiding the contract, such as misrepresentation, duress, undue influence, lack of capacity, or other applicable reasons.

Consult with an attorney

It’s advisable to seek legal counsel, especially if you are uncertain about the contract’s validity or the process for voiding it.

An attorney can provide guidance tailored to your specific situation and help you navigate the legal requirements.

Act promptly

Time is of the essence. In many cases, there are time limits or statutes of limitations that apply to voidable contracts.

Failing to act promptly may result in the waiver of your right to void the contract.

Communicate your intent

If you believe the contract is voidable due to a specific reason, communicate your intent to void the contract to the other party.

It’s often best to do this in writing, with clear and concise language outlining the grounds for voiding the contract.

Gather evidence

Collect any evidence that supports your claim for voiding the contract.

This may include documents, emails, correspondence, or witnesses who can attest to the circumstances that led to the contract’s formation.

Negotiate or mediate

Depending on the situation and the willingness of the other party, you may choose to negotiate a resolution or participate in mediation to reach an agreement regarding the contract’s voiding.

Mediation can be a more cost-effective and less adversarial option than going to court.

File a lawsuit

If negotiations or mediation fail and you believe that legal action is necessary, you can file a lawsuit seeking a court’s declaration that the contract is void.

Your attorney can guide you through the litigation process, including filing the appropriate legal documents and presenting your case in court.

Obtain a court order

To officially void the contract, you will typically need a court order or judgment that declares the contract null and void.

The court will review the evidence and arguments presented and make a determination.

Enforce the court’s decision

If the court grants your request to void the contract, both parties must comply with the court’s decision.

The terms of the court order will dictate the next steps, such as returning any property or funds exchanged as part of the contract.

How might a voidable contract become valid?

A voidable contract may become valid through a process known as ratification.

Ratification occurs when one or both parties to a voidable contract, who initially had the option to void it, decide to affirm the contract’s terms and continue with the agreement.

Here’s how a voidable contract can become valid through ratification:

Affirmative action

To ratify a voidable contract, one or both parties must take affirmative action to demonstrate their intent to continue with the contract.

This action typically involves acting as though the contract is valid, such as making payments or fulfilling contractual obligations.

Informed consent

The party or parties ratifying the contract must do so with full knowledge of the defects or circumstances that initially made the contract voidable.

They should be aware of their right to void the contract and willingly choose to proceed with it.

Express or implied ratification

Ratification can be either express or implied.

Express ratification occurs when the party explicitly states its intent to affirm the contract’s terms.

Implied ratification arises from the party’s conduct and actions that indicate they have accepted the contract’s validity.

No duress or undue influence

Ratification must occur without any further coercion, duress, or undue influence.

If the initial defect in the contract resulted from these factors, ratification would not be considered valid.

No new consideration required

Ratification generally does not require new consideration (additional benefits or obligations) beyond what was already agreed upon in the original contract.

Parties can reaffirm the contract’s terms without renegotiating the deal.

Clear intent

The intent to ratify the contract must be clear and unambiguous.

Courts typically look for evidence that the party acted voluntarily and knowingly to affirm the contract.

Time limitations

Some jurisdictions may impose time limitations on the ability to ratify a voidable contract.

Parties seeking to ratify should do so within a reasonable time frame.

Example of ratification

Let’s say Sarah entered into a contract with John to sell her antique piano.

Later, Sarah discovered that John had misrepresented the piano’s value, making her believe it was worth much less than it actually was.

Initially, Sarah had the option to void the contract due to misrepresentation.

However, after further consideration, Sarah decides to keep the contract in place.

She informs John of her decision to affirm the contract’s terms and proceeds with the sale, knowing the piano’s actual value.

In this case, Sarah’s affirmative action to proceed with the contract, with full awareness of the misrepresentation, constitutes ratification, making the initially voidable contract valid.

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PandaDoc is not a law firm, or a substitute for an attorney or law firm. This page is not intended to and does not provide legal advice. Should you have legal questions on the validity of e-signatures or digital signatures and the enforceability thereof, please consult with an attorney or law firm. Use of PandaDocs services are governed by our Terms of Use and Privacy Policy.

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• When Is a Contract Considered Void or Voidabl...

When Is a Contract Considered Void or Voidable?

(This may not be the same place you live)

  What is a Contract?

A contract is an oral or written agreement between two or more parties that creates mutual legal obligations between the parties. To be valid and enforceable, a contract must include:

• An offer (e.g., “I offer you $150,000 for your house”)
• An acceptance of the offer presented (e.g., “I accept your offer of $150,000 for my house”)
• A promise on each side to perform their contractual duties (“I will pay you the money” and “I will sell you the house”)
• Valuable consideration from each party. “Consideration” means something each party will either give up or do. For example, in a contract to buy a car, the buyer’s consideration is the money for the car, and the seller’s consideration is turning over ownership of the car

In addition to these clauses, most contracts also contain the following provisions:

• A date or time when the performance must be made (“Closing will be within 20 days of the signing of the sales contract”)
• Terms and conditions for the performance (“Payment must be by certified check or money order”)
• Performance – the parties exchange the money for the house

Based on a law called the statute of frauds , some contracts must be in writing, or the court will not enforce them. Examples of such contracts include:

• Any contract for the sale or transfer of land
• Any contract involving the sale of more than $500 worth of goods
• A contract promising to pay someone else’s debts
• A contract where performance cannot be completed within one year
• Any marriage contract
• A contract where an executor of an estate agrees to pay off the debts of the estate personally.

What Is the Difference Between Void and Voidable? When Is a Contract Considered Void or Voidable?

What steps must i take if i need to void a contract, do i need a lawyer for assistance with void or voidable contracts.

“void” and “voidable” are often mistakenly used interchangeably. Although these terms may seem similar, they are quite different.

A contract held to be void cannot be enforced by either party. An example of a void contract would be a contract requiring one party to perform an act that is either impossible or illegal. Such a contract is considered “void on its face.” Nothing has to be done to render such a contract unenforceable – if there is any attempt to enforce it, it is treated by the law as though it simply never existed. The contract is voided as written and cannot be changed or amended. No damages are available for breach of a void contract because under the law, there was no contract to breach.

Some examples of void contracts include:

• Contracts involving an illegal subject matter, such as drug dealing, illegal gambling, or committing a crime
• Contracts which are entered into by someone not mentally competent, such as people with severe mental illness
• Contracts that require an impossible performance or the performance is dependent on an impossible event happening
• Contracts that are against public policy
• Contracts that restrain certain activities, such as the freedom to choose whom to marry

A voidable contract is a valid contract that can still be enforced. However, in a voidable contract, one of the parties has the right to cancel the contract. Some examples of voidable contracts include:

• Contracts were entered into when one party was a minor. The minor can void the contract, but the other party does not. Since they are considered an innocent victim, the minor does not have to perform their obligations under the contract if they do not want to.
• Instances where one party was forced or tricked into entering the contract
• At the time they entered into the contract, one party was incapacitated in some way, such as drunk or high, or insane or delusional

Sometimes, the court may allow parts of the contract to be rewritten instead of voided. Legal remedies will vary, depending on the circumstances of the contract, but will be ordered in the amount needed to put the plaintiff back in the case they were in before entering into the contract.

Generally speaking, whether a contract is void or voidable, the process is the same. It is necessary to file a request with the court to have the contract reviewed. This will help the court determine whether the contract is void or simply voidable and what other remedies could be available. An example of this would be how a damages award may be available for extra losses caused by a breach of contract , but only in specific circumstances.

If you find yourself needing to have a contract voided, you should refer to your copy of the contract, as well as any other important documents from the contract formation process. Additionally, you should keep records of receipts, bills, and other documents proving any losses you have incurred as a direct result of being involved with the contract in case you are entitled to monetary damages.

In court, the process of having a contract voided generally follows these steps:

• A judge will review the contract for terms or factors that may cause it to be invalid
• The judge will look for any other legal reason as to why the contract should be void, such as duress at the time of signing.
• The judge will review any collection of documents and information supporting that reason.
• A determination will be made as to whether an entirely new contract is needed or if, instead, portions of the contract should be rewritten. Alternatively, the contract may be abandoned altogether.

Each state maintains different laws regarding contracts, business matters, and commerce regulation. This is because each state has different commercial needs. It is a good idea to consult with a qualified local contract lawyer about this complex contract issue. A local lawyer will know just what is needed to get the result you desire.

Note that death does not void all contracts. The death of a party to the contract does void certain contracts, but not all. Some examples of contracts that may still be valid after the death of a party include:

• Conditions of a Decedent’s Will: I f a donation to be paid overtime is outlined, this creates a contract. In this contract, the estate must continue making the donations, even after the individual’s death and
• Joint Contract: The most common example of this would be where two individuals, such as a married couple, have a mortgage on a home. When one spouse dies, the living spouse must continue making mortgage payments.

If you are involved in a contract dispute and need to know if the contract is void or voidable, you should consult a local contract lawyer . In the case of a dispute, an attorney is in the best position to advise you about the strengths and weaknesses of each party’s position. Your attorney can also represent you in negotiations, mediation, arbitration, and court if it comes to that.

An even better idea is to consult with a contract attorney before entering into the contract. An attorney can review the terms of the contract to ensure they are in your best interests and advise you against signing anything that could be unenforceable later on.

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