Contracts: Void versus Voidable

A contract is an agreement between two or more parties creating obligations that are enforceable by law. In short, a contract sets out the legal relationship between the parties to the contract regarding the subject matter of the contract. Society recognizes the agreement and, in the event of a breach of an obligation by a party, provides remedies to the party to whom the obligation was due. Indiana recognizes that it is in the best interest of the public not to unnecessarily restrict an individual’s freedom to enter into a contract. However, the law also recognizes that a valid and enforceable contract must meet certain requirements.

In general, a contract is formed through a meeting of the minds that is expressed through offer and acceptance. Contracts must also have adequate consideration. In addition, there are certain contracts that the law will not recognize as valid. These may include contracts that cannot be executed lawfully or contracts that violate public policy. If a contract creates an incentive to commit acts that society has made illegal or disproves of, it may be against public policy. In the event that a dispute arises out of one of these contracts, a court may say the contract is void. Though the parties have gone through the process of making a contract, no contract has been formed because it lacks an essential element.

A void contract is incapable of ratification. A voidable contract, by contrast, is a contract in which a party to the contract has the privilege of electing for it to be valid or void. As an example, contracts that are induced by fraud or duress are voidable. If a party was induced by fraud to enter into a contract, it may be voidable by that party.  If you have questions concerning a contract or want assistance understanding your obligations and rights pursuant to a contract, please reach out to one of our attorneys at McNeelyLaw LLP by calling (317) 825-5110.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.