Difference between Void and Voidable Contract

Understanding the difference between void and voidable contracts is crucial for anyone entering into a legal agreement. While both terms may sound similar, they have distinct meanings and legal implications. In this article, we’ll explore the difference between void and voidable contracts and what it means for those involved.

Void Contracts

A void contract is one that is considered legally invalid from the beginning. Such contracts are unenforceable in court and have no legal effect. This is because they are created under circumstances that are prohibited by law.

Examples of void contracts are those that involve illegal activities such as gambling, prostitution, and drug trafficking. Contracts that involve fraud, duress, or undue influence are also considered void. Additionally, contracts that violate public policy or go against ethical principles may be void as well.

It`s important to note that a void contract can’t be ratified or revalidated by a court or by the consent of the parties involved. Such contracts are considered legally non-existent, and any actions taken in relation to them are not binding.

Voidable Contracts

On the other hand, a voidable contract is considered legally binding until it is voided by one of the parties involved. A voidable contract is an agreement that can be canceled or voided by one or both parties due to certain legal circumstances.

Examples of voidable contracts include those signed by individuals who lack the mental capacity to enter into a legal agreement, those signed under duress or undue influence, and those signed by minors. Contracts that are made under false pretenses, misrepresentations, or fraud are also considered voidable.

When a voidable contract is entered into, the party that wishes to void the contract can do so by informing the other party or parties involved of their intentions. The contract then becomes null and void, and all obligations specified in the agreement are canceled. The party that has been harmed by the voidable contract may also be able to sue the other party for damages incurred.

The Bottom Line

In summary, the main difference between void and voidable contracts is that void contracts are legally unenforceable from the beginning, while voidable contracts can be binding until one party voids the contract. It`s important to understand the legal implications of both types of contracts before entering into any agreement to avoid any potential legal issues that may arise.

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