A contract can be voidable under certain circumstances.
If you are in a business situation that concerns the transfer of goods and services, you may want to know the difference between a void contract and a voidable contract. As most business transactions involve a written contract, knowing your rights under both can prevent confusion in the formation and enforcement of your contracts.
Contract
A contract consists of an agreement between two of more parties for an exchange of goods or services. Elements of a valid contract include an offer, an acceptance and an exchange of consideration. For example, when you see an item for sale, the quoted price is the offer. The credit card or cash you give to the sales clerk for the item is the consideration for the contract, and the acceptance occurs when the sales clerk takes your money and hands you the item. Possession of the item and title pass in a valid contract.
Void Contract
The problem arises, and the contract is void, if the contract is for an illegal good or service; you are a minor under the age of 18; you are over the age of 18, but found to legally lack the mental capacity to enter into a contract; the terms of the contract become illegal due to laws passing while the contract is in progress; or the contract violates a fundamental principal of law. With a void contract, there was never a valid contract, title to the item does not pass and the contract is legally unenforceable. For example, if you enter into a contract to buy an illegal drug, like cocaine, pay for it but receive baby powder instead, the courts will not enforce the contract for the seller to give you cocaine, as buying cocaine is illegal.
Voidable Contract
A voidable contract can start out as a valid contract and later become voidable. This happens because one party to the contract, through no fault of his own, is unable to perform. For example, if you enter into a contract to sell a boat and a hurricane destroys the boat, you can no longer supply the boat, so either you or the buyer can void the contract due to the impossibility of performance. A voidable contract is binding on one party but the other party can decide whether to void or ratify the contract. For example, a minor signs a contract for the gym several days before his birthday. As the contract was entered into while he was a minor, the gym must provide the membership if he desires, although if the minor chooses he can void, or cancel, the contract without penalty. However, the minor can also ratify, or accept, the gym contract once he becomes of age, making this a valid contract.
Differences
One difference between a void contract and a voidable contract involves title. With a void contract, title to the item never passes, as there is no contract, while with a voidable contract, title passes immediately and remains with the buyer until the contract is void or nullified. A minor buyer can accept, or ratify, a voidable contract to make it valid, while a void contract will never become a valid contract. The final difference is that a void contract is not legally enforceable at any point in its existence, while a voidable contract can be legally enforceable until it is nullified or void.
Tags: valid contract, void contract, voidable contract, contract legally, contract title, contract voidable
