A voidable contract is a legal agreement that is initially considered valid and enforceable, but one or both parties have the option to void or cancel the contract due to certain legal reasons, such as misrepresentation, fraud, duress, undue influence, or incapacity. Unlike void contracts, which are invalid from the beginning and have no legal effect, voidable contracts are initially binding but can be invalidated if the aggrieved party chooses to do so. The party with the right to void the contract can choose to either affirm the contract and continue with its terms or elect to void the contract and seek remedies such as rescission (undoing the contract) or damages.
When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract whose consent was caused by fraud or misrepresentation may, if he thinks fit, insist that the contract shall be performed and that he shall be put in the same position in which he would have been if the representation made had been true. If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of S. 17 of the Contract Act, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence. A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.
When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused. Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the court may seem just.
When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is promissory. The party rescinding a voidable contract shall, if he has received any benefit thereunder from another party to such contract restore such benefit, so far as may be, to person from whom it was received.
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This glossary post was last updated: 29th March, 2024.
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