What is a voidable contract?

A voidable contract refers to an agreement that initially appears valid and enforceable but contains certain conditions that allow one or both parties to reject or nullify it. For instance, such conditions might include situations involving misrepresentation, undue influence, fraud, or the inability of one party to give informed consent due to factors such as age or mental capacity.

In essence, while the contract exists and could be enforced, it has the potential to be made void depending on the circumstances surrounding its formation. This is vital in business and legal contexts because understanding that a contract can be voided under specific conditions affects how parties approach their agreements and deal with potential disputes. The recognition of a voidable contract serves to protect parties who may have entered into an agreement under unfair or misleading circumstances.