Voidable

Voidable describes a contract or agreement that is valid and binding unless and until it is formally rejected or disaffirmed by a party who has the legal power to do so. In essence, the contract exists and is enforceable until the party with the power to void it chooses to nullify it.

The power to void a contract typically arises due to specific circumstances, such as:

• Lack of Capacity: One party lacked the legal capacity to enter into the agreement (e.g., a minor, or someone deemed mentally incompetent).
• Misrepresentation or Fraud: One party was induced into the contract based on false or misleading information provided by the other party.
• Duress or Undue Influence: One party was forced or coerced into entering the contract against their will.
• Mistake: A significant error or misunderstanding of a fundamental fact relating to the contract existed at the time of formation.

If a party possesses the right to void a contract and chooses to exercise that right, the contract is treated as if it never existed. Both parties are typically restored to their original positions (the status quo ante), meaning any money or property exchanged is returned. However, the party with the power to void can also choose to affirm the contract, in which case it remains valid and enforceable.

It is important to distinguish between a voidable contract and a void contract. A void contract is invalid from its inception and has no legal effect. No action is required to terminate it because it never existed legally. A voidable contract, on the other hand, is valid until it is voided by the party with the right to do so. The distinction is crucial as it impacts the rights and obligations of the parties involved. The burden of proving the existence of grounds for voiding a contract usually rests on the party seeking to void it. The remedy for a voidable contract is often rescission (cancellation) and restitution (restoring the parties to their pre-contractual positions).