This is a series of posts about contract terms to help you understand your business better. To see the previous post in this series, click this link: Post 1, Post 2, Post 3, Post 4, Post 5.
Post 6. Contract Glossary of Terms: Void or Voidable Contracts
These terms, void and voidable, refer to types of contracts. Not every contract is void or voidable. Though when they are, it’s good to know which one applies because they are completely different.
A void contract is one that is void from the beginning. That is, when a court finds a contract void, they say that it has no effect, as if the parties never agreed on anything and the contract was never made.
A voidable contract is slightly different. When a court finds a contract voidable, it usually means that one party has the ability to not enforce the contract. That one party is usually the harmed party.
The reason for the difference is that void contracts are usually made from actions that are so egregious and wrong in the eyes of the law (think fraud) that as a policy matter it is better off for the contract to not exist at all.
A voidable contract, on the other hand, is usually the product of one person’s actions that are wrong, but not egregious. An example would be selling (anything) to a minor. It’s not so bad that the contract shouldn’t exist at all, but it’s bad enough that the harmed party (the minor, who can’t truly understand what he’s agreeing to) should be able to back out if he wants.
If you have any questions about void or voidable contracts, or if you’d like to make sure your contracts stick, contact Attorney Francis Boyer today.
