When entering into a contract, it is important to understand the legal concept of void and voidable contracts. In some cases, a contract may be unenforceable, which means that either party may be released from fulfilling their obligations under the agreement. Here we will discuss the differences between void and voidable contracts and when each may occur.
Void Contracts
A void contract is an agreement that is legally unenforceable from the beginning, which means the contract is invalid. In other words, if a contract is void, it is as though it never existed. The reasons why a contract may be void include:
1. Lack of capacity: If one or both parties involved in a contract are minors, mentally incompetent, or under the influence of alcohol or drugs, the contract can be considered void.
2. Illegal purpose: A contract that is created for any illegal purpose, such as a contract for selling illegal drugs, is considered void.
3. Fraud: If one of the parties involved in the contract intentionally deceives the other party to enter into the agreement, the contract can be considered void.
4. Mistake: A contract entered into based on a mutual mistake about a material fact or essential element is void.
Voidable Contracts
On the other hand, a voidable contract is an agreement that has the potential to be voided by one of the parties involved. In other words, either party has the option to enforce or nullify the contract. Reasons why a contract may be voidable include:
1. Duress: A contract entered into under the threat of harm or force is voidable.
2. Undue influence: A contract that is entered into under pressure or manipulation by one of the parties involved is voidable.
3. Misrepresentation: If one of the parties involved in the contract makes a false statement or conceals important information, the contract can be considered voidable.
4. Unconscionable: A contract may be considered voidable if one of the parties involved has an unfair advantage over the other party, such as in the case of an extremely unequal bargaining power.
In conclusion, it is important to understand the difference between void and voidable contracts and the situations in which each may occur. If you are entering into a contract, it is important to seek legal advice to ensure that the agreement is enforceable and that you are protected.
