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Under What Circumstances is a Contract Voidable?

Business and Commercial Disputes By Harvey Binnall PLLC - 2018/12/07 at 12:26pm

If you’re involved in a business dispute over a breach of contract, then it’s possible that the underlying agreement is voidable.  Voidable contracts give certain parties additional rights to terminate the contract and to avoid liability for breach, but the circumstances giving rise to a voidable contract are specific and limited.

Void vs. Voidable — Understanding the Difference

Those who are involved in a breach of contract dispute may not realize that there is a functional difference between void and voidable contracts.  This difference could have significant implications for the case at-hand.

Void contracts are fundamentally unenforceable.  They are invalid by default, and none of the parties to the contract can be held to its terms.  Contracts that have been rendered impossible to fulfill are “void,” as are contracts involving illegal activity.  For example, a contract for the purchase of a rare earth metal that has now been exhausted cannot stand — it will be deemed void by law and therefore unenforceable.

Voidable contracts are not actually valid and enforceable, though a party who has been disadvantaged due to some circumstance surrounding the contract (for example, if they were under duress to enter into the contract) may choose to “void” it and thereby render it unenforceable by law.  In other words, a voidable contract is one for which a party has the right to terminate it prematurely, if they wish.  This allows the disadvantaged party to continue with a contract if it turns out to be suitable for them, or to end it on their own terms.

Circumstances Rendering a Contract Voidable

A contract may be rendered voidable if:

  • Any party was under duress, undue influence, or was being intimidated, coerced, or threatened when entering into the agreement;
  • Any party was mentally incompetent (i.e., mentally ill, below the age of majority, etc.) at the time that the contract was entered;
  • Any party made a mistake as to their interpretation of the contract terms; or
  • There was fraud or misrepresentation of material facts involved.

For example, suppose that you enter into a contract for the services of a contractor team who will be renovating your office.  The contractors misrepresented themselves by telling you that they have won numerous awards in their industry (when in fact they have not done so).  If this misrepresentation had a material impact on your choice to enter into an agreement with the contractors, then the agreement would almost certainly be voidable.  In other words, you could terminate the contract and avoid liability for breach.

Contact an Experienced Alexandria Business Dispute Lawyer for Assistance

Harvey & Binnall, PLLC is a boutique commercial litigation firm based out of Alexandria, VA and serving a range of clients throughout Virginia, Maryland, and the Washington D.C. metro area.  We have extensive experience representing the interests of both plaintiffs and defendants in various breach of contract disputes, including those that involve circumstances that create a “valid but voidable” agreement.

Unlike many of our competitors, we are willing and able to litigate a case aggressively and to secure a favorable result at trial.  This approach to litigation put us in an advantageous position during business dispute negotiations and can help us achieve a more cost-effective and less time-consuming “win” for our client.

If you’d like to discuss your contract claims, we encourage you to call 703-888-1943 or send us a message online to speak to an experienced Alexandria business dispute lawyer at Harvey & Binnall, PLLC.