What is a voidable contract?

| Mar 20, 2020 | Contracts |

In the context of contracts, a contract can either be valid, void or voidable. According to UpCounsel, a voidable contract means that one or both of the parties to the contract has the ability to elect to make that contract void. That is, it is a power bestowed under one person to say this contract is no longer valid. 

This normally arises in the event of one party lacking some form of capacity, being defrauded or entering into the contract because of misrepresentation. An example of this is when you have someone who does not have the mental capacity to enter into a contract. This primarily arises with someone who is under the age of majority in a jurisdiction, which is usually 18 years old. So, if you enter into a contract with a 17-year-old now, they can come back to you and make that contract void. There are certain exceptions that the minor may have to pay, such as the reasonable value of the services or value of the goods that they used during that time. They will only have to pay for necessities such as food, shelter, reasonable clothing, etcetera. Nonetheless, they still have the ability to void the contract. 

Other examples would be someone who is severely intoxicated and did not have the capacity to enter into a contract at the time of their intoxication. If somebody is extremely intoxicated, and they offer you their wrist lodge, which is extremely valuable, to give them a ride down the road, which is no cost or very little value. That is a contract. It is an exchange of value. When that person becomes un-intoxicated, they could immediately contact you and let you know that they want to void the contract. In that case, they would be entitled to receive back the property that they gave you.