Void Contract vs. Voidable Contract: Key Differences & Legal Implications

Contracts are a foundational element of business, but not all may be enforceable. In a void vs. voidable contract, void contracts are never valid, while a voidable contract may only be valid for a period of time. An experienced business litigation lawyer can provide oversight and counsel on the legality of any contracts you may consider entering into. 

Thorsnes Bartolotta McGuire applies our 47+ years of business experience to ensure you have the resources you need to continue to operate your business with ease and confidence. 

Our firm is nationally recognized for our impressive track record and excellent service, which we provide to each one of our clients. To better understand how these contracts can affect your business, call our office at (619) 236-9363 or contact us online today. 

Understanding Void Contract vs. Voidable Contract

Void contracts are agreements that are not valid from the start and cannot be legally executed or enforced. Void contracts generally lack one or more of the necessary elements of a contract to make it legally binding. 

For a contract to be legal, it must have an offer for another party to accept, and both parties must be aware of what they are doing to consider their responsibilities, including being within their capacity to understand what they are entering into. 

By contrast, voidable contracts are legally binding from the start. This type of contract can be voided at a later date through the choice of one of the parties or upon grounds outlined in the contract. 

In the event that the contract is voided through a breach of contract, legal action can be taken for the other party to recover any losses they incurred from the party that broke the contract. 

In summation, the difference between a void and voidable contract comes down to enforceability. Since a void contract is not valid, it cannot be legally binding. Below is a closer look at each contract and the types of situations in which they are applicable to better illustrate void vs. voidable contract.

Void Contract Example

Void contracts are often created under unacceptable conditions and are not legally binding from the very beginning. These contracts usually involve something that makes them completely unenforceable under the law. That could mean:

• The agreement is illegal, like a contract to sell something that's against the law.
• One or more people aren’t legally able to enter into a contract. For example, if they’re underage or mentally incapacitated.
• The contract is missing something essential, like a clear purpose or legal terms that everyone agrees on.

Because these contracts are invalid, none of the parties involved can be held to their contents, and it’s almost as if the contract never existed in the first place. Some instances of what could be considered a void contract include a contract to sell illegal drugs or stolen goods or an agreement with a minor to purchase real estate.

Contracts are significant legal documents that have a lot riding on them. Lawyers should review your business contracts before you sign them to ensure that all contracts are legal and valid. They can also help you navigate the nuances of contract laws, both at the start of the contractual relationship and later on if issues arise between the parties involved. 

If you're in a situation where a deal feels off or you're worried about how a contract was handled, reach out to Thorsnes Bartolotta McGuire today online or by calling (619) 236-9363. We’ll walk you through it and help you protect your business.

Voidable Contract Example

A voidable contract is one that legally holds one party to the deal, while the other party has the power to either keep it going or cancel it. In other words, one side has the choice to walk away if something isn’t right when the contract was made.

Unlike a void contract, the contract is initially legally valid, but the other party has the option to back out. A contract might be voidable if: 

• Someone was pressured or forced into signing it (this is called duress).
• The contract was signed based on false or misleading information due to business defamation or other reasons.
• One side failed to disclose important details.
• The terms are extremely unfair or one-sided.
• The agreement involves a minor (someone under the legal age to sign a contract).
• There was a major mistake or misunderstanding about the agreement.

For example, a contract may be voidable if a small business owner agrees to a supplier contract after being threatened with losing access to key inventory or if a partnership deal is made based on fake revenue numbers.

Also, if one party breaches the terms of a valid contract, the other party may be able to end the agreement and seek financial compensation for any losses caused.

Protect Your Business With the Aid of a Business Litigation Lawyer

In the event that contract disputes lead to litigation, a business litigation lawyer can prepare your business for a lawsuit and fight to protect your business interests and assets. They will determine the best method for helping you resolve your dispute, whether through mediation, arbitration, or litigation.

When it comes to void contracts, there usually aren’t any legal remedies because the contract was never valid to begin with. You can't enforce something that had no legal ground in the first place.

But with voidable contracts, it's a different story. If the contract was valid at first and then later canceled, or if one party broke the terms before it was voided, a lawyer may be able to seek damages or other remedies such as:

• Restitution: Returning both parties to the position they were in before the contract, so no one unfairly benefits.
• Specific Performance: A court order requiring a party to follow through with what they originally agreed to, often used in real estate deals.
• Reformation: Making changes to the contract so it better reflects what both sides actually meant to agree on.
• Compensatory Damages: Financial payment to cover any losses caused by a breach before the contract was canceled.

When you hire Thorsnes Bartolotta McGuire, you receive highly skilled and dedicated lawyers who will navigate the legal complexities to get you results and safeguard the business you have built. 

We provide tailored strategies and aggressive representation in order to get you the maximum compensation or remedies for your losses.

Thorsnes Bartolotta McGuire Guides You Through Contract Disputes

Thorsnes Bartolotta McGuire can help you and your business navigate the legal implications of these contracts and uphold the foundation of your business. 

A business litigation lawyer will ensure you are legally protected and help you resolve any contract disputes that may arise. Contact us today or call our office at (619) 236-9363 to schedule a free consultation with our team and learn about how we support the contractual needs of your business.