When a contract is void, it becomes invalid, inapplicable, and unenforceable.
But when a contract is voidable, it means the involved parties no longer need to follow the terms of the contract.
In this article, we’ll be discussing void vs voidable contracts.
We’ll also explore their key differences and how to handle such contracts.
What is a void contract?
A void contract is a contract that is not legally enforceable as far as the governing law is concerned.
For example, if you sign an agreement under duress, it’s a void contract because you didn’t fully consent to it.
What makes a contract void?
There are so many reasons why a contract would be void, but it all boils down to these five factors:
- A legal contract is void due to unfairness if one party suffers drastically due to the contract.
- The law can void a legally binding contract if the terms of the agreement are impossible to fulfill.
- A contract can become void if one of the parties has no legal standing to sign the agreement in the first place.
- Contracts signed by minors and people with diminished capacity without supervision and guardianship are void.
- A management contract is void if the legal obligations contain terms that feature illegal activities or crimes.
- Contracts that go against public policy are also null and void, regardless of the overarching subject matter.
What is a voidable contract?
A voidable contract is a type of contract that can be canceled legally by either party involved.
This means that the agreement is not null and void yet, but any of the parties could initiate the cancellation process.
However, this process is complicated due to several mitigating factors the court must consider before nullifying a contract.
What makes a contract voidable?
According to contract law, a voidable contract can be legally canceled, and there are ways to recognize such contracts before attempting to contest them in court.
- If one party misrepresents or fails to reveal essential elements of a contract before signing it, the contract will become voidable by default.
- A contract becomes voidable if one party, through discovery, determines that the contract terms or stipulations contain fraudulent services or declarations.
- Any contract signed under false pretexts or duress is voidable as long as a legal practitioner can prove the undue influence of external mitigating factors. This also applies to contracts signed under the influence of drugs or medical anesthesia.
- If a minor (below the legal age) is a party to an agreement without their parent’s or guardian’s permission, the contract is voidable under common law.
- A contract becomes voidable and eligible for disaffirmance once one of the involved parties is guilty of breach of contract.
Other voidable contract examples are industry-specific. For instance, if a real estate contractor refuses to allocate your property, the original contract can be voidable.
If you can’t fulfill the end of your contract for any reason, you should contact the other party or parties involved and let them know your reasons.
Void vs voidable contract: Similarities and differences
Sometimes, people assume voidable and void mean the same thing. But the reality is that they are starkly different.
But first, let’s find the unifying factor between both types of contracts.
As we mentioned above, any contract signed by a minor without adult supervision can be both void and voidable, depending on the specific scenario.
Coercion, duress, and undue manipulation are all grounds for voiding a contract. Once the law can prove one of the signatories is not in the right mental state, the contract loses validity.
And that brings us to the differences between void and voidable contracts.
Before signing a contract, you must confirm its validity. To help you understand validity, we’ll compare the following terms — viable, void, and voidable.
A viable or valid contract is when an offer is made by one party, and the other parties involved agree without the use of force or any other negative factor.
A void contract is an invalid, unenforceable contract from inception. A voidable contract starts out as viable and valid but becomes invalid due to legal reasons.
| Void Contract | Voidable Contract |
|---|---|
| A contract is void from the beginning. | A contract becomes voidable along the way. |
| A void contract is unenforceable, no matter the situation. | A voidable contract can only be annulled if the court sees legal reasons to do so. |
| A void contract is invalid even if none of the parties revoke or cancel it. | A voidable contract remains valid until one of the parties initiates the cancellation process. |
How can I void a contract?
Getting out of a contract is not easy, but there’s always a loophole in legal issues.
When going through the rescission process to a void agreement, here are the key questions to ask:
- Are the terms of the contract compliant with the law?
- Did the other party extend a deal that was accepted under no undue influence?
- Is the contract mutually beneficial to all the parties involved?
- Are the conditions exploitative or immoral?
- Are all the signatories within the legal age?
- Do the signatories have total mental capacity to agree to the terms of the contract?
These questions will give you legal recourse to cancel or void a contract. Always seek legal advice before voiding a contract under these provisions.
Here are the steps to void a contract:
- Contact your legal representative or a law firm.
- Review the terms of the agreement to make sure there is no disclaimer.
- Outline the conditions for legality or validity.
- Reach out to the other party to cancel the contract.
- If they disagree, take the matter to court.
- End the contract and apply for compensation for expenses and damages.
In most cases, parties to a contract agree to void the contract without involving the courts.
This option works for everybody: no legal fees, no meddling of courts.
How to keep a contract viable and valid with PandaDoc
If you have a void contract, there’s no hope of making it valid.
The only solution is to draft a new contract after canceling the running agreement.
But if it’s voidable, you can follow a ratification process if a party with the power to reject the terms of the contract refuses to do so.
In less severe cases, you can renegotiate terms to amend the agreement in your favor or remove all traces of illegality.
In general, you need to keep an eye on the state law to figure out if the conditions of the agreement are still tenable.
Also, you need to fulfill your end of the enforceable contract while making sure the other party is on the straight and narrow.
This will protect you from contract disputes.
With PandaDoc’s contract management solution, you can keep track of your contracts to make sure they are viable, valid, and enforceable.
This solution also has legally binding contract templates for various industries. You can also use it to sign, track, and renew your contracts.
To find out how PandaDoc can create viable and enforceable contracts, book a demo right away.
Disclaimer
PandaDoc is not a law firm, or a substitute for an attorney or law firm. This page is not intended to and does not provide legal advice. Should you have legal questions on the validity of e-signatures or digital signatures and the enforceability thereof, please consult with an attorney or law firm. Use of PandaDoc services are governed by our Terms of Use and Privacy Policy.
