Contracts are vital to any business transaction or agreement. They provide a legal framework that governs the behavior and obligations of the parties involved. Sometimes, however, issues arise with contracts that make them voidable or unenforceable. These terms may seem similar, but they have different meanings in contract law.
Voidable Contracts
A voidable contract is a valid contract that one or both parties can choose to enforce or rescind. The term “voidable” means that the contract is subject to being voided or canceled. The reasons for voiding could include fraud, duress, misrepresentation, or undue influence. In some cases, voidable contracts are the result of one party lacking legal capacity, such as being underage or mentally incompetent.
An example of a voidable contract is a contract signed by an individual under duress. If the individual was threatened into signing the contract or forced into it through coercion, they could choose to void it. The contract was legally binding at the time of signing, but the individual had no choice in the matter. Once the threat or coercion is removed, the individual can decide whether to enforce or void the contract.
Unenforceable Contracts
An unenforceable contract is a contract that cannot be enforced by law. The term “unenforceable” means that even though the contract may have been valid at the time of signing, a legal technicality or issue prevents it from being enforced. An example of an unenforceable contract is a verbal agreement that is not in writing and does not meet the legal requirements to be enforceable.
Another common type of unenforceable contract is one that violates public policy. Contracts that are considered against public policy are those that are illegal, immoral, or harmful to society. For example, a contract that seeks to pay someone to commit a crime or harm another person would be considered against public policy and unenforceable.
The Differences between Voidable and Unenforceable Contracts
In summary, the primary difference between voidable and unenforceable contracts is that a voidable contract can be either enforced or voided by one or both parties due to issues such as fraud, duress, misrepresentation, or undue influence. An unenforceable contract, on the other hand, is a contract that cannot be enforced by law due to a legal technicality or violations of public policy.
Conclusion
Contracts are the backbone of any business transaction, and understanding the differences between voidable and unenforceable contracts is crucial. Knowing the reasons why a contract may be voidable or unenforceable can help parties avoid disputes and ensure all agreements are legally binding. Remember that it is always important to consult a qualified attorney before signing any contracts to avoid issues of enforceability in the future.
