Voidable Contract Definition with Example
A voidable contract refers to a legal agreement that can be canceled or annulled by one of the parties involved. This type of contract may appear to be valid and enforceable, but one or more of the parties may have grounds to void the agreement. Voidable contracts are different from void contracts, which are considered null and void from their inception, meaning they never had any legal effect.
Examples of voidable contracts include those that involve duress, undue influence, misrepresentation, mistake or incapacity. Let`s take a closer look at each of these grounds for voiding a contract.
1. Duress
Duress refers to a situation where one party is forced or threatened to enter into a contract against their will. For example, if someone signs a contract with a gun pointed at their head, the contract is considered voidable because it was signed under duress.
2. Undue Influence
Undue influence occurs when one party uses their position of power or trust to influence another party into signing a contract that is not in their best interest. For example, if a doctor persuades a patient to sign a contract giving the doctor a portion of their estate in exchange for medical treatment, the contract may be voidable due to undue influence.
3. Misrepresentation
Misrepresentation involves making false statements or providing incomplete information to induce another party to sign a contract. For example, if a car dealer fails to disclose that a car has a history of major mechanical problems, the contract may be voidable due to misrepresentation.
4. Mistake
Mistake refers to a situation where one or more parties make an error in the contract`s terms or provisions. For example, if a contract contains a clerical error or a mathematical mistake, it may be voidable due to mistake.
5. Incapacity
Incapacity refers to a situation where one or more parties lack the legal capacity to enter into a contract. For example, if a minor enters into a contract, the contract is considered voidable because minors lack the legal capacity to enter into binding agreements.
In conclusion, a voidable contract is an agreement that may be canceled or annulled by one of the parties involved due to duress, undue influence, misrepresentation, mistake, or incapacity. It is important to consult a legal professional if you believe you have grounds to void a contract.