What is a voidable contract?

A voidable contract is a contract that is legally binding, but can be legally annulled or avoided. This means that either party can decide not to go through with the contract and still remain within the boundaries of the law. In Texas, this means that a party can cancel a contract without consequence if there is any evidence of coercion, misrepresentation, fraud, undue influence, or incapacity. Coercion occurs when one party is forced to enter into a contract by using threats, physical force, or other unethical means. Misrepresentation occurs when one of the parties knowingly or unknowingly says something false about the subject of the contract. Fraud occurs when a party knowingly deceives another party in order to get them to sign the contract. Undue influence occurs when one party exercises pressure on another to sign a contract that is not in their best interests. Incapacity occurs when one party does not have the legal capacity to enter into a contract because of age, mental illness, or lack of understanding regarding the terms of the agreement. If any of the above conditions applies to a contract, the law allows either party to declare the contract null and void. This means that the contract cannot be enforced, and neither party is legally obligated to honor its terms. A voidable contract is only legally binding if the parties agree to continue with it, or if an outside court decides to enforce it.

Related FAQs

What is the effect of a modification of a contract?
What is an assignment of a contract?
What is consideration in a contract?
What is a contract of service?
What is a mutual rescission of a contract?
What is a novation of a contract?
What is a breach of the implied covenant of good faith?
What is a third-party guarantor?
What is the law of privity?
What is anticipatory repudiation?

What is a voidable contract?

Related FAQs

Related Blog Posts