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What are Voidable Contracts

Voidable Contracts

During the contract drafting process it is important for both parties to determine if they are creating a voidable contract. Contract laws have defined a voidable contract as a contract that one or both parties may cancel at their discretion.

If contract drafting results in a voidable contract, it means a contract has been created which a party is able to annul at their pleasure. Contract laws have stated that an voidable contract is a contract that is otherwise legal, except that one of the parties has released the other from its obligations.

A contract can be voided in several different circumstances. If a minor was entered into a contract by a legal guardian they may elect to void the contract upon reaching the age of majority. The minor usually has two years in which to void the contract. If an individual has been defrauded by a contract, the defrauded individual will be allowed to avoid the contract.

In order to reduce confusion between voidable contracts and void contracts, the United Kingdom, Australia, and other common law jurisdictions outside of the United States and Canada used the word "avoid" to describe the when one party is released from their obligations.

A voidable contract is only considered an enforceable contract against the party which cannot void the contract. A voidable contract cannot compel action against the party which is allowed to "void" the contract.

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