Voidable

Definition of Voidable

A voidable contract is a formal agreement between two parties that may be rendered unenforceable for various legal reasons. Unlike void contracts, which are invalid from the start, voidable contracts are valid unless one party chooses to void them. This means that the contract remains effective and binding until an action is taken to cancel it. Such actions are typically predicated upon specific legal grounds, such as misrepresentation, duress, undue influence, or the incapacity of one of the parties involved.

For example, a contract entered into by a minor is considered voidable at the discretion of the minor. This allows the minor to either honor the agreement or void it without facing legal consequences.

Examples of Voidable Contracts

Lease Agreement with a Minor:
- A landlord leases an apartment to a minor. The minor can choose to honor the lease or void it. In either case, the minor does not face any liability for performing under the lease.
Misrepresented Real Estate Transaction:
- If one party induces another to sign a real estate contract through fraudulent misrepresentation, the aggrieved party has the right to void the contract.
Contract Signed Under Duress:
- If an individual is forced or threatened into signing a real estate purchase agreement, they can later void the contract due to the presence of duress at the time of signing.

Frequently Asked Questions (FAQs)

Q1: What makes a contract voidable?

A contract becomes voidable when one party has the legal right to cancel the agreement due to factors such as age (minor), misrepresentation, undue influence, fraud, or duress.

Q2: Can an adult later claim a contract voidable if they signed it as a minor?

Yes, most jurisdictions allow an individual to void a contract signed while they were a minor, provided they act within a reasonable timeframe after reaching adulthood.

Q3: How does voiding a contract affect the parties involved?

Voiding a contract nullifies it as though it never existed. The parties are released from their obligations, and any exchanged benefits may need to be returned.

Q4: Is mutual agreement required to void a voidable contract?

No, only the party with the right to void the contract needs to take action. However, formal procedures usually apply to declare the contract void.

Q5: Can a voidable contract ever be ratified?

Yes, a voidable contract can become binding if the party entitled to void it chooses to affirm the contract explicitly or through their actions, thus waiving their right to void it.

Void Contract: A contract that is invalid from inception and has no legal effect.
Ratification: The act of confirming or adopting an agreement that makes it legally binding.
Capacity: The legal competence of a person to enter into a contract.
Inducement: Factors that persuade or influence someone to enter into a contract.
Duress: Compulsion by threat or forcible action, which can make a contract voidable.

Online Resources

References

Smith, J. M. (2018). Principles of Contract Law. Thomson West.
Miller, R. L., & Jentz, G. A. (2019). Business Law Today: The Essentials. Cengage Learning.
Beatty, J. F. (2020). Introduction to Business Law. South-Western College Pub.
Werigoda, P. R. (2021). Contract Law for Dummies. Wiley.

Suggested Books for Further Studies

Contracts by Brian A. Blum.
Contract Law: Rules, Theory, and Context by Brian H. Bix.
Principles of Contract Law by Steven Burnley.
Business Law: Text and Cases by Kenneth W. Clarkson & Roger LeRoy Miller.
The Law of Contracts and the Uniform Commercial Code by Pamela Tepper.

Real Estate Basics: Voidable Fundamentals Quiz

### What is the primary characteristic of a voidable contract? - [ ] It is automatically void from inception. - [x] It is valid but can be voided by one party. - [ ] It cannot be enforced under any circumstances. - [ ] It must be ratified by both parties to take effect. > **Explanation:** Voidable contracts are valid agreements but may be declared void at the discretion of one party. They remain enforceable until an action is taken to void them. ### Who can void a real estate contract signed by a minor? - [ ] The landlord only - [ ] The guardian of the minor - [x] The minor themselves - [ ] A legal representative only > **Explanation:** In most jurisdictions, the minor has the exclusive right to void the contract since it protects individuals who may lack the full capacity to understand the agreement. ### What must a party prove to void a contract signed under duress? - [ ] Evidence of misunderstanding the terms - [x] Evidence of coercion or threat - [ ] Mutual mistake by both parties - [ ] Adequate consideration wasn't provided > **Explanation:** A party must show that they signed the contract under coercion or a threat, thereby voiding the agreement based on duress. ### Can a voidable contract be ratified? - [x] Yes, by the party entitled to void it - [ ] No, it must remain voidable - [ ] Yes, but by only the other party - [ ] No, it invalidates the contract immediately > **Explanation:** A voidable contract can become binding if the party entitled to void it chooses to affirm the contract and waive their right to void it. ### When is a lease agreement entered into by a minor valid? - [ ] Never valid under any circumstance - [ ] Only valid if ratified by an adult - [x] Valid until the minor decided to void it - [ ] Only valid if approved by a court > **Explanation:** A lease agreement entered into by a minor is generally valid unless the minor decides to void it; it is a classic example of a voidable contract. ### Are there legal consequences for a minor voiding a real estate contract? - [ ] Yes, they may be sued for breach - [ ] Yes, they must provide compensation - [ ] No, there are no legal repercussions - [x] No, they are protected by law > **Explanation:** Legal systems usually protect minors from liability when voiding contracts because minors are considered incapable of fully understanding legal agreements. ### What differentiates a voidable contract from a void contract? - [ ] A voidable contract is illegal. - [x] A void contract is not enforceable from inception, while a voidable contract is valid until voided. - [ ] A voidable contract holds less legal weight than a void contract. - [ ] A void contract needs ratification to be valid. > **Explanation:** A void contract is not enforceable from its inception, while a voidable contract is initially valid and enforceable until one party chooses to void it. ### Under what condition can a contract be considered voidable due to undue influence? - [ ] Both parties benefit equally - [ ] It's a naturally risky contract - [x] One party uses excessive influence over the other - [ ] The contract fails to meet legal formalities > **Explanation:** A contract can be declared voidable if it is shown that one party uses excessive influence, leading the other party to enter the agreement without free will. ### What should a party do to legally void a voidable contract? - [ ] Obtain mutual consent - [x] Formally declare their intention to void it. - [ ] Announce it publicly - [ ] File a lawsuit immediately > **Explanation:** The party with the right to void the contract typically needs to formally declare their intention to void it according to prescribed legal procedures. ### Can both parties mutually agree to void a voidable contract? - [x] Yes, they can agree to rescind it. - [ ] No, only one party has that power. - [ ] Yes, but it requires court approval. - [ ] No, the contract must remain until one party voids it. > **Explanation:** Both parties can mutually agree to rescind or void a voidable contract, though usually, this action is driven by the party entitled to void it.