- Void Contracts: These are contracts that are unenforceable from the start and have no legal effect. Examples include contracts with minors for the sale of real property or contracts that call for a party to commit a crime.
- Voidable Contracts: These are contracts that are legally binding but can be disaffirmed by the innocent party. They can either be treated as void or ratified and enforced. Examples include contracts entered under fraud, mistake, or duress.
- Innocent Party’s Role: In the case of a voidable contract, only the innocent party has the ability to affirm and enforce the contract. If the innocent party ratifies the contract and accepts its benefits, they cannot later disaffirm it.
- Legal Consequences: A void contract cannot be validated or ratified by the innocent party. In contrast, a voidable contract becomes enforceable if ratified by the innocent party.
What is a Voidable Contract?
There are certain distinctions between such terms.
A contract is that is merely voidable, compared to a contract that is void, can either be disaffirmed and treated as void or it can be ratified and enforced. However, only the innocent party has the ability to affirm and enforce a voidable contract.
Voidable Contracts Examples
Some examples of contracts that are voidable are those that were entered under fraud, mistake, or duress or contracts entered into with minors or persons of unsound mind. Voidable contracts are legally binding on both parties until the innocent party seeks to rescind such contract.
However, if the innocent party ratifies a voidable contract and accepts its benefits, then the innocent party confirms the enforceability of the contract and cannot later try to disaffirm the contract.
What Is Void Contract
A contract that is void cannot be enforced by either party, has no legal effect, and can be disregarded entirely without any action by the innocent party.
That is because a void contract is void from the start. Therefore, the innocent party cannot validate or ratify such a contract.
Void Contracts Examples
Some examples of contracts that are void are contracts with a minor for the sale of real property, contracts with discriminatory covenants, such as restrictive covenants based on race, creed, or color, and contracts with subject matters that are barred by statute or call for a party to commit a crime.
If a contract is void, the guilty party cannot recover any value for the services rendered pursuant to the void contract under the theory of quantum meruit.
Moreover, a court may permit the “less guilty” party to recover the consideration already given under the void agreement. Even though this may result in possible injustice between the parties, the purpose of this rule is to deter future illegal conduct.