Voidable Contract

Definition

A voidable contract is an agreement that may be legally enforced but can be rejected by one or more parties due to certain circumstances. These circumstances often involve issues of consent or capacity, allowing the affected party to either affirm or void the contract based on factors like undue influence, mistake, duress, or the status of the parties involved.

5 Must Know Facts For Your Next Test

1. In a voidable contract, the party with the right to void the contract has a specific time frame within which they must act; otherwise, the contract may become binding.
2. Contracts with minors are typically voidable at the minor's discretion, allowing them to disaffirm the contract without penalty once they reach the age of majority.
3. A mutual mistake about a fundamental fact of the contract can make it voidable by the adversely affected party.
4. If a contract is entered into under duress, it can be declared voidable because the agreement was not made freely and voluntarily.
5. The concept of economic duress applies when one party unfairly pressures another into a contract, making it voidable due to lack of genuine consent.

Review Questions

• How does undue influence create grounds for a contract to be considered voidable?
  • Undue influence occurs when one party takes advantage of their position over another, using pressure that undermines that person's free will. When this happens in a contract situation, it creates grounds for the affected party to declare the agreement voidable. The law recognizes that true consent was not given due to this coercive influence, allowing the influenced party to choose whether to enforce or rescind the contract.
• Discuss how mistakes can impact the enforceability of a contract and lead it to be classified as voidable.
  • Mistakes, whether mutual or unilateral, can affect the validity of a contract. If both parties are mistaken about a vital aspect of the agreement, it may be voidable because there is no true meeting of the minds. In cases of unilateral mistakes where one party is aware of the other’s error, the mistaken party may have grounds to void the contract if it significantly alters their obligations. Thus, mistakes disrupt the fundamental premise needed for a valid agreement.
• Evaluate how factors such as mental incapacity and intoxication can influence whether a contract is deemed voidable.
  • Mental incapacity and intoxication play crucial roles in determining whether a contract is enforceable. If an individual lacks mental capacity or is intoxicated at the time of contracting, they may not fully understand what they are agreeing to. In such cases, these conditions render the agreement voidable, allowing the incapacitated or intoxicated party to challenge its validity later. This protection ensures that individuals cannot be held accountable for agreements made without full comprehension or voluntary consent.

Related terms

Undue Influence: A situation where one party exerts excessive pressure on another party to enter into a contract, undermining their free will.

Capacity: The legal ability of a person to enter into a contract, which may be restricted due to age, mental state, or intoxication.

Duress: The act of using threats or coercion to compel someone to enter into a contract against their will.