Though void contracts and voidable contracts seem similar and are sometimes used interchangeably, they have distinct meanings.

This article will highlight the key similarities and differences between void and voidable contracts and demonstrate how to use Docupilot to create valid and viable contracts.

What is a Void Contract?

A void contract lacks legal enforceability. Neither party to a void contract can approach a court of law and obtain a judgment in their favor. This is because void contracts contravene laws and regulations, and authorities tasked with implementing and upholding the law will not endorse or validate such contracts.

What Makes a Contract Void?

A contract can become void due to several reasons, including:

• Illegality: A contract for purchase of illegal substances, such as drugs, is void because drug dealing is an illicit activity
• Impossibility: A contract for the performance of an impossible act, such as predicting the value of a stock, is void because making accurate predictions is impossible. A valid contract can become void if it deals with a subject matter, e.g. a rare book manuscript, that is destroyed in due course, rendering contract performance impossible
• Lack of capacity: Contracts with parties lacking legal capacity, including minors, mentally incapacitated individuals, or intoxicated persons, are void. Business contracts approved by personnel not authorized to sign contracts are similarly void
• Vagueness: Contracts with vague terms are void as they do not provide certainty and specificity about the obligations of the involved parties
• Lack of formalities: While verbal contracts are legally enforceable, the Statute of Frauds in the US requires certain contracts, e.g. for the sale of land, to be in writing. Therefore, verbal contracts for land sale will be void as they don’t comply with the legal requirements regarding formality

To avoid creating a void contract, consult relevant legal professionals and ascertain the necessary legal requirements for a valid contract. 

What is a Voidable Contract?

A voidable contract is an agreement that is valid and enforceable until a party to the contract decides to cancel it.

A party can reject a contract if they discover a defect, such as fraud, after entering into the agreement. The party disadvantaged by the defect can also decide to continue with the contract, in which case the contract remains valid. Both parties can also decide to remove the defect by modifying the contract. 

What Makes a Contract Voidable?

A party to a contract can decide to void it due to one of several reasons, including:

• Misrepresentation: If a party makes false statements that induce the other party to enter the contract, the misled party can choose to void the contract. This principle is equally applicable to intentional and unintentional misrepresentation
• Duress: A contract signed under duress—the use of force or threats—can be voided by the coerced party
• Unconscionability: If a contract is grossly unfair or one-sided, the disadvantaged party can choose to void it
• Failure to meet conditions: A contract with contingencies can be voided by the affected party if the specified conditions are not met

Contracts are lengthy and complex documents and manual creation often leads to errors and inaccuracies that can lead to disputes and legal ramifications. These result in voidable contracts. Using contract automation software like Docupilot can minimize the downsides of manual contract creation, reduce costs, and streamline the contract creation process. 

Void vs. Voidable Contracts: Differences and Similarities

Examples of Void and Voidable Contracts

To better understand these concepts, let’s look at real-life examples of void and voidable contracts.

Void contract examples

Example from real estate

An example of a void real estate contract is an agreement by a seller who does not legally own the property. Such a contract is void because the seller lacks the legal authority to transfer ownership.

Example from finance

Financial agreements facilitating illegal activities, such as money laundering or fraud, are void because they violate the law.

Voidable contract examples

Example from real estate

A buyer inspects a property, decides to buy it, and signs a purchase agreement with the seller. However, during the final inspection, the buyer finds that a certain portion of the property has been modified. This is an example of misrepresentation, as the condition of the property has changed, and the buyer now has the option of voiding the contract or enforcing it.  

Example from finance

If a party enters into a financial contract based on fraudulent statements or misrepresentations made by the other party, the deceived party can void the contract.

How Can I Void a Contract?

A contract is a legal document, and you can void it if you can prove that it contains one or more defects, such as evidence of it being one-sided or being signed under duress.

If you entered into a contract and later decided to void it, you must first find legally valid reasons for doing so.

If you review the contract and find misrepresentation, duress, failure to meet conditions, unconscionability, or any other defect, and can prove it, you have solid grounds for voiding it. 

Since you might not be a legal expert, it is always a good idea to consult a lawyer to develop a strategy for canceling a contract.

Sometimes, you may choose to void a contract by reaching an agreement with the other party without involving the courts.. In other cases, the other party may not agree to your proposal, and you will have to seek a court judgment in your favor. 

What is a Valid Contract?

A valid contract is a legally binding agreement between two or more parties. Key elements of valid contracts that guarantee enforceability include:

• Offer: One party proposes terms to another
• Acceptance: The other party agrees to the proposed terms
• Consideration: Refers to an exchange of value, such as money, services, or goods
• Mutual agreement: Both parties must understand and agree to the contract's terms
• Capacity: The involved parties must have the legal ability to enter into a contract 
• Legality: The purpose of the contract must be lawful

Keep Contracts Viable and Valid With Docupilot

In business, you can’t take the risk of entering into unlawful (void) or defective (voidable) contracts. You need valid contracts that satisfy legal requirements, are mutually beneficial, and comply with necessary legal formalities. 

Contract automation with Docupilt can help you create valid and viable business contracts. You can: 

• Create templates with the necessary legal language and clauses to minimize the risk of omissions that could render a contract void or voidable
• Minimize human errors, such as typos and inaccuracies, that can invalidate contracts
• Use version control to track changes, maintain accountability, and always use the most up-to-date document version
• Integrate with 70+ apps, including Zapier, Airtable, and DocuSign, for workflow automation, electronic signature, email, online storage, and more

With affordable credit-based pricing, Docupilot is suitable for businesses of all sizes. When you sign up, you get full access to all features, regardless of the pricing plan you choose. 

‍Sign up for a 30-day free trial and see your contract success rate improve exponentially.