A voidable contract is an agreement between two parties that can be either enforced or rejected at the choosing of one of the individuals. It is a contract that is valid when signed, but either or both of the parties may choose to make the contract null and void.
A voidable contract, therefore, is a legally valid contract that can be considered void at the request of one party, but not the other. It is a defence against any breach of contract action for the party argued that it was void. A voidable contract allows one party (the one who may have been taken advantage of) to back out without consequence while holding the other concerned parties accountable.
For example, if the contract involves a minor, he will be able to void the contract unless they are 18 or older. If circumstances have substantially changed since the time the contract was created, such as the death of a party, that may also make the contract voidable. Common law, on the other hand, allows any contract which is deemed “unconscionable” to be voided if one party can demonstrate that he has been deceived by the other party.
A contract is void, on the other hand, when circumstances render the contract unenforceable. Some examples of when a contract might be void include situations where both parties entered into the agreement under fraudulent circumstances, or where one party was forced to sign the agreement against their will.
When one party fraudulently induces another to enter into a contract, then the agreement may be considered null and void. Fraud can take many forms, such as when a buyer misrepresents their identity or financial status to induce the seller to accept less than the fair market value for the goods. In such cases, the seller could contest that any contract made is null and void due to fraud.
Another reason for a contract being void is when one party had no authority to make an agreement on behalf of an organization. For example, if someone who did not have legal power over a business negotiated and signed a contract on its behalf, then that agreement would likely be considered void because it was not executed by someone with sufficient authority.