Even if a contract exists, it may not necessarily be enforceable. There are a number of reasons why a court might not enforce a contract. Often, it's to protect people from unfairness in the bargaining process, or in the substance of the contract itself. In such circumstances, a contract may be voidable.
But what is a voidable contract?
When a contract is voidable, a party to the contract is able to cancel or revoke the contract.
Contracts can become voidable due to:
- Mistake. A contract can be canceled on the grounds of a mutual mistake of fact. But remember, failure to read the contract doesn't make a contract voidable.
- Lack of capacity. A person must have the legal ability to form a contract in the first place. A person who is unable, due to intoxication or mental impairment, to understand what she is doing when she signs a contract may lack capacity to enter into a contract.
- Coercion, undue influence, misrepresentation and fraud. Getting consent for a contract in a number of shady ways can make a contract voidable. Contracts entered into based on coercion, threats, false statements, or improper persuasion can be voided by the party who was the victim of the unfairness.
- Minor. Falling under the umbrella of capacity, a contract entered into by a minor typically may be voided by the minor or by his or her guardian. After reaching the age of majority (18 in most states), however, if he or she doesn't cancel the contract within a reasonable period of time, the contract can become binding and enforceable.
Void v. Voidable
Note, however, that a voidable contract is different from a void contract. Void contracts can't be legally enforced, period. The law treats them as if no agreement was ever made. An agreement to perform an illegal action, for instance, is a void contract. A voidable contract, on the other hand, may be voided by a party if the party so chooses.
Getting a contract reviewed is a sensible step toward figuring out whether your contract is void or voidable. One cost-effective option is to sign up for a prepaid personal legal plan like those offered by LegalStreet, which include attorney contract reviews (up to 10 pages) and on-call help from local lawyers. LegalStreet plans start at less than $13 a month.
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