Void vs Voidable Contract
The distinction between Void and Voidable Contracts lies in their legal status. While both terms are frequently used in relation to contracts, they have entirely different meanings. A Void Contract is an illegal contract that cannot be made valid at any point, whereas a Voidable Contract is a legal contract that can be avoided or cancelled later on by one of the parties involved.
What is a Void Contract?
A Void Contract is a contract that is null and without legal effect, meaning it is unenforceable by law and cannot be enforced by any of the parties involved. The parties do not have the power to make such a contract legal, and these contracts are often classified as Void ab initio – void from the beginning. Legally, Void Contracts are treated as though they never existed or were never created, and if there is a breach of contract, one party cannot file an action against the breaching party because there was no contract to begin with. Instances or situations that render a contract void include contracts involving illegal activities such as drugs, gambling, and prostitution, or contracts involving the performance of an illegal act (committing a crime). Contracts entered into by mentally incompetent persons or minors, as well as contracts that require the performance of an impossible act or depend upon the occurrence of an impossible event, are also considered Void Contracts.
What is a Voidable Contract?
A Voidable Contract is a legal contract that is not fully or completely void but may be avoided. It is valid, binding, and enforceable by law until one party decides to avoid or declare it void. A Voidable Contract contains some form of defect, and if the party entitled to reject the contract chooses to cancel or revoke the contract, it becomes void. However, if the same party chooses not to reject the contract despite the defect, the contract remains valid and enforceable. Grounds on which a legally enforceable contract may become Voidable include contracts entered into when one party was a minor, contracts made on the grounds of fraud, misrepresentation, undue influence or duress, and contracts entered into when one party was intoxicated or mentally impaired.
Key Takeaways
- A Void Contract is illegal and invalid from its creation, while a Voidable Contract is a legal contract that may become invalid if one party opts to cancel or revoke it.
- A Void Contract is unenforceable by law and does not have legal existence at any point in time, meaning that the performance of a Void Contract is impossible.
- Voidable Contracts are valid and enforceable by the parties involved until one party chooses to reject or cancel the contract based on a defect such as fraud, misrepresentation, duress, or undue influence.
