MEANING OF VOIDABLE AGREEMENTS/CONTRACT
Also Read: What Is a Lawful Object in Contract Law? Meaning, Importance, 6 Easy Examples & Key Points
Contract on the basis of enforceability can be classified into different divisions, viz. valid contracts, void agreements, voidable contracts, unlawful agreements or unenforceable agreements. Voidable contracts are those contracts-
a. enforceability of which depends upon the interest of the party whose consent is not free,
b. consent of one party in which is not free,
c. which are valid until avoided.
Where consent to an agreement is taken by coercion, undue influence, misrepresentation or fraud the party whose consent was not free can apply before the court to avoid the contract within a certain time period or limitation fixed by law.
Example
A sells a motorcycle to B after falsely claiming it has never been involved in an accident. Later, B discovers the truth. Since B’s consent was obtained through fraud, B has the legal right to cancel the contract. If B decides to keep the motorcycle despite knowing the truth, the agreement remains valid.
LEGAL EFFECTS OF VOIDABLE CONTRACTS
Effects of voidable contracts can be mentioned as follows:
1. Validity of the contract depends upon the option of the party whose consent was so caused. Where a contract is valid non of th parties can go for invalidity, and where a contract void can not make it valid but voidable contracts either can be valid or void. Therefore if A’s consent was taken by fraud by B. Only A can go to declare the contract void and not by B. If A accepts the transaction the contract though caused by fraud becomes valid and binding. (Voidable Agreements)
Example
A tricks B into signing a land sale agreement by providing false information. Only B has the right to cancel the agreement, not A.
2. The voidable contract are valid and binding upon the parties until it is avoided. Until the contract is avoided by court the parties are bound by the contract.
Example
A signs a contract under undue influence. Until A cancels the agreement, both parties must follow the contract terms.
3. If a person in possession of goods under a voidable contract, the property in such goods transfers to the third person who has purchased the goods in good faith and without having knowledge of the prior facts.
Example
A obtains a laptop from B through fraud and later sells it to C. If C purchases it honestly without knowing about the fraud, C becomes the lawful owner.
4. The injured party can claim compensation or remuneration of his service.
Example
A falsely advertises a machine’s performance. B purchases it and suffers financial loss. B can seek compensation.
5. Parties of a voidable contract may be punished by law.
Example
A forces B to sign a contract through threats. Besides cancellation of the agreement, A may also face legal action.
6. Burden of proof to prove the case of coercion, undue influence, misrepresentation or fraud lies upon the party claiming the contract to be void.
Example
If B claims A committed fraud during a property sale, B must present evidence supporting the allegation.
Frequently Asked Questions
1. What is a voidable agreement in simple words?
A voidable agreement is a contract that is legally valid but can be cancelled by the party whose consent was not given freely because of fraud, coercion, undue influence, or misrepresentation. (Voidable Agreements)
2. What makes a contract voidable?
A contract becomes voidable when one party’s consent is obtained through unfair means such as fraud, coercion, undue influence, or misrepresentation. (Voidable Agreements)
3. Who has the right to cancel a voidable agreement?
Only the party whose consent was not freely given has the legal right to cancel the agreement.
4. Is a voidable contract valid until it is cancelled?
Yes. A voidable contract remains legally valid and enforceable until the affected party decides to cancel it or the court declares it void. (Voidable Agreements)
5. Can compensation be claimed in a voidable agreement?
Yes. If a person suffers loss due to fraud, coercion, or misrepresentation, they may claim compensation according to the law. (Voidable Agreements)
6. What is the difference between a void agreement and a voidable agreement?
A void agreement has no legal effect from the beginning, whereas a voidable agreement remains valid until the injured party chooses to cancel it. (Voidable Agreements)
7. Can an innocent third party obtain ownership under a voidable agreement?
Yes. If the third party purchases the property honestly without knowing about the defect, they generally obtain a valid title. (Voidable Agreements)
8. Who must prove that a contract is voidable?
The party claiming that the contract is voidable must provide evidence showing that their consent was obtained unfairly. (Voidable Agreements)
