When parties enter into a contract, there is an expectation that both sides will abide by the terms outlined in the agreement. However, certain circumstances may arise that render a contract voidable. A voidable contract is a legal document that may be legally canceled or voided by one or both parties involved. In this article, we’ll discuss what happens if a contract is voidable.

What is a Voidable Contract?

A voidable contract is a legally binding agreement that may be canceled or voided by one or both parties involved. This type of contract differs from a void contract, which is an agreement that is not enforceable from the beginning. A voidable contract is considered valid until it is voided. A contract may be voidable for several reasons, including:

– Misrepresentation: If one party to the contract knowingly or unknowingly misrepresents facts or information relevant to the agreement, the contract may be voidable.

– Duress: If one party to the contract threatens or coerces the other party into agreeing to the terms, the contract may be voidable.

– Fraud: If one party to the contract intentionally or knowingly misrepresents information or conceals crucial information, the contract may be voidable.

– Mistake: If one or both parties to the contract make a mistake regarding facts relevant to the agreement, the contract may be voidable.

What Happens if a Contract is Voidable?

If a contract is voidable, either party may choose to void or cancel the agreement. The terms of the voidable contract are effectively null and void once it has been canceled. However, the voiding of a contract does not necessarily result in a clean slate for both parties. There may be consequences and obligations that arise from canceling the agreement.

For example, if the contract involved a sale, the buyer may be required to return any merchandise or goods received, while the seller may need to refund any money paid by the buyer. Additionally, if one party suffered damages as a result of the voidable contract, they may be entitled to compensation.

It`s important to note that in some cases, a voidable contract may be ratified or confirmed by the parties involved. Ratification is the act of accepting or agreeing to a contract that was initially voidable. This can occur when both parties agree to waive their objections and move forward with the agreement.

Conclusion

A voidable contract is a legally binding agreement that may be canceled or voided by one or both parties involved. If a contract is voidable, either party may choose to cancel the agreement. The terms of the voidable contract are effectively null and void once it has been canceled, but there may be obligations and consequences that arise from canceling the agreement. It`s important to understand the circumstances that may render a contract voidable and to seek legal advice before taking any action to ensure that your rights are protected.