Voidable Contract
Definition and meaning of Voidable Contract in real estate.
A voidable contract is a formal agreement that is legally binding on the parties but can be rejected or voided by one of the parties due to a specific legal defect.
In more detail
Unlike a void contract, which is invalid from the start, a voidable contract remains in effect until the injured party takes legal action to set it aside. Common reasons a contract is voidable include signing under duress, misrepresentation of key facts, mutual mistakes, or if one party was a minor at the time of signing.
For example, if a seller misrepresents the condition of a home, the buyer might have the option to declare the contract voidable. If the party with the power to cancel decides to proceed anyway, the contract is ratified and remains fully enforceable.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Status | Valid until legally rejected by the eligible party |
| Typical causes | Duress, fraud, misrepresentation, signing as a minor |
| Key distinction | Different from a void contract, which is invalid from inception |
A buyer signs a purchase contract based on a false disclosure about a home's foundation, making the agreement a voidable contract that the buyer can choose to cancel.
Frequently asked questions
Can a minor enter into a real estate contract?
A minor can sign a contract, but it is typically voidable at the minor's discretion because they lack the legal capacity to enter binding agreements.
What happens if a voidable contract is ratified?
Ratification means the party with the right to void the agreement chooses to accept it, making the contract fully binding on both sides.