What constitutes a void contract?

On Behalf of | Aug 16, 2021 | Business Litigatioon |

When considering whether to enter a lawsuit over a contract, it is important to know if the lawsuit is viable in court. There are a few instances where a contract cannot legally be enforced or where it becomes voidable, able to be voided by either party.

Knowing if your contract is legally valid can help save you time and money. While there may be cases a contract may not be valid, seeking legal advice can be helpful in your decision.

Void and voidable

There is a difference between a contract that is void and one that is voidable. A void contract cannot be legally enforced if the contract is breached. A voidable contract may be terminated at any point by either party. This can be caused by either a clause in the contract or other legal circumstances.

Causes of void contracts

It may seem that contracts are always legally binding, but there are some exceptions where a contract is not legally valid or can be voided at any time by either party. Three things that can make a contract void are:

  • Incompetence – If one party is incompetent at the time of signing
  • Inclusion of illegal elements – if the contract mandates either party to break the law
  • Impossibility of performance – when part of the contract becomes impossible for either party to carry out

Voidable Contracts

There are some cases where a contract can be disputed and voided. This is most likely to happen if there are defects in the contract or if one party learns an element of the contract which would have deterred them from initially entering the contract.

If either party is presented with new information or discovers defects in the contract but does not elect to reject the contract, the contract is still legally binding.