Voidable Contract Definition in Simple Words
Contracts are an essential part of our daily lives. We enter into various contracts knowingly or unknowingly, either verbally or in writing. However, not all contracts are valid or legally enforceable. Some contracts may be voidable.
A voidable contract is a legal agreement between two or more parties that one or more parties can choose to enforce or void due to a legal defect, such as fraud, error, duress, or incapacity. This means that one party has the option to cancel or terminate the contract without any legal consequences while the other party may face consequences for breaching the contract.
For instance, if a person enters into a contract with another party while under duress or coercion, the contract they signed is voidable. This means that the person who signed under duress can choose to enforce the contract or terminate it, while the other party may face damages or penalties for inducing them to sign.
Similarly, if a person enters into a contract with another party based on false information or misrepresentation, the contract may be voidable. For example, if a car salesman sells a car to a customer by falsely stating that it has a clean history report, the customer may choose to void the contract and return the car if it is found to have a salvage title.
Another example of a voidable contract is one in which one party lacks the mental capacity to understand the terms of the agreement. For instance, if a person with a severe mental disability signs a contract without understanding its terms, the contract may be voidable. The person or their legal guardian can choose to enforce or void the contract based on their capacity to understand.
In conclusion, a voidable contract is a legal agreement that is subject to being terminated or continued based on a legal defect. The decision to enforce or void the contract rests with the party who suffered a legal defect. It is important to understand the terms of any contract and ensure that all parties enter into it freely and without any coercion, misrepresentation, or incapacity.