Voidable Contract

A Voidable Contract is a legally binding agreement that one or more parties can choose to void or enforce due to specific circumstances, such as misrepresentation, duress, or lack of capacity.

AKA: Voidable Agreement, Avoidable Contract.
Context:
- It can be legally binding and enforceable unless one party exercises the option to void it.
- It can arise from situations involving misrepresentation, fraud, undue influence, coercion, or incapacity.
- It can allow the aggrieved party to either affirm the contract and proceed or repudiate it, rendering it void.
- It can remain valid until the party entitled to void it decides to do so within a reasonable timeframe.
- It can involve contracts entered into by minors, which are typically voidable at the minor's discretion.
- ...
Example(s):
- Misrepresentation Agreement, an agreement entered into based on fraudulent misrepresentation, allowing the deceived party to void the contract upon discovery.
- Duress-Induced Contract: any contract signed under duress, where one party was forced into the agreement, is voidable at the option of the coerced party.
- Contract by a Minor: with some exceptions, a contract made by a minor is voidable.
- ...
Counter-Example(s):
- Void Contract, which are unenforceable from the outset due to illegality or impossibility, unlike voidable contracts that are initially valid.
- Enforceable Contract.
See: Invalid Contract, Unilateral Contract, Bilateral Contract, Contract Consideration, Contractual Mutuality, Contract Mutual Assent.

References

(ChatGPT-OpenAI, 2024) ⇒ Prompt: Summarize the concept Voidable Contract in 1- 2 paragraphs. ChatGPT (model:gpt-4o). Retrieved: 2024-11-08.
- QUOTE: A voidable contract is a valid and legally binding agreement that may be either affirmed or rejected by one of the parties involved. This type of contract remains enforceable unless one party, the party with the power to void the contract, decides to cancel or rescind it. The grounds for a contract to be considered voidable typically involve circumstances under which a party's consent was not genuinely obtained, such as through instances of misrepresentation, fraud, undue influence, coercion, or duress. A contract involving minors is also often deemed voidable, as minors typically do not have the legal capacity to enter into contracts.
  While a voidable contract gives one party the option to exit the agreement, the contract itself is not automatically null until that party takes affirmative steps to void it. If that party chooses to proceed with the contract, it continues to be fully enforceable. Conversely, if the party decides to cancel the contract, they must do so within a reasonable time and before any ratification actions are taken, such as accepting benefits under the contract. This framework serves to protect parties who were not fully consenting or capable, while still maintaining the integrity and enforceability of contractual agreements when properly embraced by all parties involved.

(Rapal, 2024) ⇒ Harshdeep Rapal (2024). "Void vs. Voidable Contracts: Understanding the Differences, Legal Implications, and Real-World Examples". In: Legitt AI Blog.
- QUOTE: 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 (...)
  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 (...)
  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.

(Wikipedia, 2024) ⇒ https://en.wikipedia.org/wiki/Voidable_contract Retrieved:2024-11-16.
- A voidable contract, unlike a void contract, is a valid contract which may be either affirmed or rejected at the option of one of the parties. At most, one party to the contract is bound. The unbound party may repudiate (reject) the contract, at which time the contract becomes void.
  Typical grounds for a contract being voidable include coercion, undue influence, mental incompetence, intoxication, misrepresentation or fraud. A contract made by a minor is often voidable, but a minor can only avoid a contract during his or her minority status and for a reasonable time after he reaches the age of majority. After a reasonable period of time, the contract is deemed to be ratified and cannot be avoided. ^[1] Other examples would be real estate contracts, lawyer contracts, etc.
  When a contract is entered into without the free consent of the party, it is considered a voidable contract. The definition of the act states that a voidable contract is enforceable by law at the option of one or more parties but not at option of the other parties. A voidable contract may be considered valid if it is not cancelled by the aggrieved party within a reasonable time.

(Net Lawman, 2024) ⇒ "Difference between a void and a voidable contract". In: Net Lawman. Last updated: September 2024.
- QUOTE: A voidable contract is a valid agreement (an otherwise legally binding contract) that may be rendered unenforceable for one or more legal reasons (such as one or both parties can choose to cancel or continue).
  Unlike void contracts, voidable contracts are initially valid and enforceable. However, one party has the right to end the contract under specific legal grounds that the contract states or legislation gives.
  Voidable contracts contain all the essential elements of a valid contract, and they remain valid until the circumstances terminate it (whether that is the passage of time, one party decides to terminate it, or some other situation arises as specified in the agreement).

(Kenton et al., 2024) ⇒ Will Kenton, David Kindness, and Katrina Munichiello (2024). "Voidable Contract: Definition, How It Works, and Examples". In: Investopedia.
- QUOTE: A voidable contract is a formal agreement between two parties that may be rendered unenforceable for a number of legal reasons.