Voidable Contract

AAA

DEFINITION of 'Voidable Contract'

A formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. Reasons that can make a contract voidable include failure by one or both parties to disclose a material fact; a mistake, misrepresentation or fraud; undue influence or duress; one party's legal incapacity to enter a contract; one or more terms that are unconscionable; or a breach of contract.

INVESTOPEDIA EXPLAINS 'Voidable Contract'

A voidable contract can be legally rejected by one party and is said to have a defect. If the party with the power to reject the contract chooses not to reject the contract despite the defect, the contract becomes valid and enforceable.


It is usually only one of the two parties who would be adversely affected by agreeing to a voidable contract if they had recognized the misrepresentation or fraud made by the other party. For example, the first party would not have agreed to the contract originally and has the opportunity to reject it after the fact. In contrast, a void contract is inherently unenforceable. An example would be a contract that violates the law, such as a murder for hire contract.

RELATED TERMS
  1. Void Contract

    A formal agreement that is illegitimate and unenforceable from ...
  2. Implied Contract

    A legal substitute for a contract. An implied contract is an ...
  3. Oral Contract

    A type of business agreement that is spoken, not memorialized ...
  4. Adhesion Contract

    A contract in which one party has substantially more power than ...
  5. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
  6. Assignable Contract

    A futures contract with a provision permitting the contract holder ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  2. Options & Futures

    Moral Hazards: A Bump In The Contract Road

    Learn how this phenomenon can cause a party in an agreement to behave differently than expected.
  3. Retirement

    Create A Pain-Free Postnuptial Agreement

    This marital contract can underline your love for each other - not undermine it.
  4. Economics

    America's Most Notorious Corporate Criminals

    Learn about the crimes and punishments of some of the most infamous convicted white-collar crooks.
  5. Retirement

    Time To Hire A Senior Move Manager?

    Watch for these signs that you or an elderly family member may need to downsize and move somewhere easier to manange. A senior move manager can help.
  6. Retirement

    A New Solution To Help Seniors Relocate

    As Americans age – and families try to cope – the new field of senior move managers helps seniors relocate to safer homes with the least possible stress.
  7. Investing News

    Educating Your Clients About Cybersecurity

    Financial advisors must lead the charge against cybersecurity risks, for their clients and for their own practices.
  8. Investing News

    How The Patriot Act Works & Why Is It Important

    The USA Patriot Act gave the government more muscle to fight financial crime after the Sept. 11 terrorist attacks. Here's an overview.
  9. Insurance

    What You Need To Know About Insurance Fraud

    Insurance fraud is as old as commerce. Discover the types of life insurance fraud and how they affect you.
  10. Investing Basics

    ISDA Master Agreement

    The ISDA Master Agreement is a document outlining the terms of an over-the-counter derivatives transaction between two parties. This document serves as a standard agreement in these transactions ...

You May Also Like

Hot Definitions
  1. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  2. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  3. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  4. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  5. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
  6. Irrevocable Trust

    A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets ...
Trading Center