A voidable contract is a legal term that refers to an agreement between two parties that can be declared invalid or nullified by one or both parties. This type of contract is different from a void contract, which is considered to be invalid from the outset and cannot be enforced by either party.
A voidable contract is considered legally binding until it is declared void or nullified by one of the parties involved. This means that it can be enforced if both parties agree to honor the terms of the agreement. However, if one party decides to void the contract, the other party may be unable to enforce it.
The most common situations where a contract is declared voidable include fraud, misrepresentation, duress, undue influence, or mistake. If any of these factors are present in the agreement, it may be considered voidable by the affected party.
Fraud refers to a deliberate misrepresentation of facts intended to deceive the other party. Misrepresentation occurs when one party makes a false statement or conceals information that is essential to the other party`s decision to enter into the agreement. Duress is when one party is coerced or threatened into signing the contract, while undue influence is when one party has an unfair advantage over the other, such as a position of power or influence.
Mistake occurs when one or both parties make an error in judgment or fact that affects the validity of the agreement. It can be either unilateral or mutual. In the case of a unilateral mistake, only one party is mistaken, whereas mutual mistake occurs when both parties misunderstand a term or condition in the contract.
In summary, a voidable contract is a legally binding agreement that can be declared invalid if certain conditions are met. These conditions include fraud, misrepresentation, duress, undue influence or mistake. If any of these factors are present, the affected party may choose to void the contract, making it unenforceable. As with any legal agreement, it`s important to seek legal counsel before entering into any contracts to ensure that you fully understand its terms and conditions.