Note, however, that a voidable contract is different from a void contract. Void contracts can’t be legally enforced, period. The law treats them as if no agreement was ever made. An agreement to perform an illegal action, for instance, is a void contract. A voidable contract, on the other hand, may be voided by a party if the party so chooses.
When dealing with contracts, the terms “void” and “voidable” are often confused. Even though these two contract types seem similar, they are actually completely different. A contract that is “void” cannot be enforced by either party., The law treats a void contract as if it had never been formed. A contract will be considered void, for example, when it requires one party to perform an act that is impossible or illegal.
A “voidable” contract, on the other hand, is a valid contract and can be enforced. Usually only one party is bound to the contract terms in a voidable contract. The unbound party is allowed to cancel the contract, which makes the contract void. The main difference between the two is that a void contract cannot be performed under the law, while a voidable contract can still be performed, although the unbound party to the contract can choose to void it before the other party performs.
What Are Some Examples of Void and Voidable Contracts?
Void contracts are unenforceable by law. Even if one party breaches the agreement, you cannot recover anything because essentially there was no valid contract. Some examples of void contracts include:
- Contracts involving an illegal subject matter such as gambling, prostitution, or committing a crime.
- Contracts entered into by someone not mentally competent (mental illness or minors).
- Contracts that require performing something impossible or depends on an impossible event happening.
- Contracts that are against public policy because they are too unfair.
- Contracts that restrain certain activities (right to choose who to marry, restraining legal proceedings, the right to work for a living, etc.).
Voidable contracts are valid agreements, but one or both of the parties to the contract can void the contract at any time. As a result, you may not be able to enforce a voidable contract:
- Contracts entered into when one party was a minor. (The law often treats minors as though they do not have the capacity to enter a contract. As a result, a minor can walk away from a contract at any time.)
- Contracts where one party was forced or tricked into entering it.
- Contracts entered when one party was incapacitated (drunk, insane, delusional).