Legal Definitions - voidable contract

A voidable contract is a formal agreement that is valid and enforceable until one of the parties involved chooses to cancel or reject it. Unlike a "void" contract, which is invalid from the start, a voidable contract remains binding unless and until the party with the right to cancel exercises that right. This right often arises when one party lacks the legal capacity to enter the contract, or if the agreement was made under improper influence, misrepresentation, or duress.

Here are some examples to illustrate how a voidable contract works:

• Example 1: Contract with a Minor

  Imagine a 17-year-old, who is still a minor in most jurisdictions, signs a contract to purchase an expensive gaming computer from a store. While the contract appears valid on the surface, it is voidable by the minor. This means the minor has the legal right to later decide they no longer want the computer and return it, demanding their money back. The computer store, however, cannot void the contract; only the minor has that power. If the minor chooses not to void it and keeps the computer, the contract remains valid and enforceable.

• Example 2: Contract Signed Under Duress

  Consider a situation where an individual is forced to sign a contract to sell their valuable antique collection at a very low price because another party threatened harm to their family if they refused. This contract, though signed, is voidable by the individual who was threatened. They can later go to court to have the contract canceled, arguing that they did not enter into the agreement voluntarily but rather under duress. Until they take action to void it, the contract technically exists.

• Example 3: Contract Based on Misrepresentation

  Suppose a homeowner is selling their house and falsely tells a potential buyer that the house's foundation was completely reinforced last year, when in reality, it has significant, unrepaired structural issues. If the buyer signs a purchase agreement based on this false information, the contract is voidable by the buyer. Upon discovering the seller's misrepresentation, the buyer can choose to cancel the purchase agreement and seek a refund, arguing that they entered the contract based on a material falsehood. If the buyer chooses to proceed with the purchase despite knowing the truth, the contract remains valid.