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What is the difference between a void and a voidable contract?

On Behalf of | Feb 15, 2023 | Business Litigation |

A well-written business contract may help ensure a profitable relationship between two or more companies. However, sometimes a contract contains flaws, or another party breaches the contract. This could lead to litigation over whether the contract can stand up under legal scrutiny.

As Chron explains, a contract may have defects that do not allow a court to enforce some or even all of its provisions. Depending on the case, a contract may be void or voidable.

Defining a void contract

If your contract turns out to be void, it means you have an agreement that is not legal under law. From the very start, the contract was not legitimate. Therefore, a court will almost certainly rule that any money or property that changed hands during the period of the contract will go back to the initial owner.

Defining a voidable contract

The main difference between a voidable contract and a void one is that a voidable agreement contains legal terms and language for the most part or even in full. However, problems arise if one or more parties entered into the contract under false pretenses or coercion.

Generally, voidable contracts lack key information such as material facts. They may also have mistakes or incorrect representations of information. A voidable contract could also contain unconscionable terms. In some cases, a person may sign a contract but lack the ability to consent to a legal agreement.

Questions of enforceability

A void contract, being completely illegal, is not enforceable. By contrast, sometimes voidable contracts can continue to legally bind the parties. However, it is also possible for parties involved to modify the contract defects or agree to void the contract.

Given that contract disputes take many forms, various outcomes could result after litigation has begun.