Essentially, the difference between void and voidable contracts is enforceability: a void contract is illegal and unenforceable; a voidable contract is legal and enforceable.
A contract that is void is unenforceable, meaning that neither party has legal recourse against the other for a breach. A contract can be void from the beginning or become void due to certain circumstances, including:
- It involves illegal activity
- It is against public policy
- It is impossible to perform
- It involves a party who is not legally competent
A contract may be valid when it is executed, but later become void due to changes in the law or the circumstances of either party make fulfilling the contract impossible. Some issues will make a contract “void on its face,” meaning that the contract as written is void and cannot be amended to make it enforceable.
A voidable contract is a valid agreement between two parties where usually only one of the parties is bound to the contract terms. A voidable contract can still be performed under the law; however, one party has the option to cancel the contract if the contract has one or more legal defects, such as:
- Fraud or misrepresentation
- Terms are unconscionable
- Duress or undue influence
- Mutual mistake
If defects are found in the contract, a party can reject it. If the contract is not rejected, it remains a voidable contract that can be ratified.
When contract disputes arise, you need experienced legal representation and advice. Williams Commercial Law Group, L.L.P., is a law firm focusing on commercial litigation and business divorce. Contact us at (602) 256-9400 and schedule a time to meet with us today.