What is a voidable transaction?
A voidable transaction is a legal agreement or contract between two parties that could be either enforced or avoided by the other party. This means that one party has the right to cancel the contract and avoid their obligation to fulfill it. In the state of Indiana, voidable transactions are governed by the Uniform Voidable Transactions Act of Indiana. This act outlines the conditions that must be met for a transaction to be voidable. Under the act, a transaction can be avoided if it is made by an entity taking on debt that lacks the capacity to do so, or if the creditor has taken an unfair advantage of the debtor. A transaction can also be avoided under the act if the creditor knowingly gave false information when inducing the debtor to enter into the agreement. Finally, a transaction may be avoided if the creditor fails to attempt to collect debt in a reasonable amount of time. In Indiana, a creditor must file a lawsuit against the debtor in order to make a voidable transaction valid and enforceable. The debtor may then raise defenses and refute the creditor’s claims. If successful, the debtor can avoid their obligation and the transaction will be rendered void.
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