Differences Between Void and Voidable Contracts

In contract law, the terms void and voidable can be confusing. While these two terms share some similarities, they are different and require a full understanding by all parties to the agreement.

The Term Void

When a contract is void, it cannot lead to enforcement by either party. This is a contract that is no longer useable. The law will then treat the contract as if the two parties never formed any type of agreement between them or any legally binding obligations. A contract is void when one party attempts to accomplish something that is either impossible or illegal in the state or country. If both parties engage in these similar activities, the void contract will not support them through any type of relationship or business dealing. However, illegal activity can lead to criminal charges.

The Term Voidable

A voidable contract can proceed through the court enforcing the clauses because it is a valid agreement between the two parties. In these situations, one party will remain bound to the terms of the contract while the other may only need to supply something such as payment or another item of value. The unbound party can cancel the contract and cause the document to become void. This term voidable provides the party that remains unbound with the power to cancel the agreement and leave the other person or entity without payment or services. The clauses are generally specific with certain stipulations.

The Primary Difference

While the terms void and voidable are different in the legal context, they also mean something different when in use. A void contract cannot perform under the law validly. However, a voidable contract can still perform legally and still have bound and unbound parties. The unbound party in the contract can void the agreement before the other party performs the necessary services as part of the contractual obligations. In a void contract, the services given are not legally bound or necessary because the agreement is no longer valid and the parties cannot uphold the contract in the courts.

Examples of Void Contracts

Most void contracts involve something illegal in the subject matter that could include gambling activities, acts of prostitution or even criminal actions of one or both parties. These contracts are not enforceable by law because they are not valid. One party can breach the agreement, but there is no way to recover anything because there is no legally binding agreement in effect. If the contract applies to someone that is not mentally competent because of an illness or someone under the age of majority, it is void. Impossible performance, impossible events and if against public policy all lead to void contracts. Another void contract is something that will restrain various activities such as legal proceedings, the right to work or the choice of who to marry.

Examples of Voidable Contracts

Voidable contracts are still legal and valid with enforceability in the courts. One or both parties can void the contract at any time in usual circumstances. Enforceability of the contract is null if one person is minor when entering into the agreement. This remains the case if the person does not have the mental capacity to enter into the contract. Others are void in a voidable situation if one party did not willingly enter into the situation, was tricked or forced. Incapacitation does not provide for a voidable contract, and if the courts discover this, the voidable contract becomes void.

Voidable contracts generally will apply when one person is bound by performance or services and the other has more power because he or she rules what is necessary. However, the voidable contract must stipulate certain terms. Without specific language, the bound party may have more leeway in what he or she can do and how to void the contract. The person bound to the terms may have the power to make substitutions such as what materials to use or when to accomplish various goals.

Legal Support for Void and Voidable Contracts

The person that is in a contract with another party will need legal support to ensure that the contract is enforceable in the courts. If the terms or circumstances void the agreement, the person or entity will need to know this prior to pursuing legal action. The lawyer will protect the party in either situation.

Provided by HG.org

Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case.

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