Understanding Voidable Contracts in Business Law

When is a contract voidable?

a. when consideration is missing

b. when agreement is missing

c. when the contract was not executed under seal

d. when one of the parties lacks capacity

Answer:

A contract is voidable when one of the parties lacks capacity.

A contract is voidable when one of the parties lacks capacity. A legal contract can be revoked by one of the contracting parties, known as the aggrieved party, making the agreement voidable. In other words, it is a formal agreement that can be revoked owing to things like fraud, coercion, lack of mental capacity, misrepresentation, etc.

A formal agreement between two parties that is voidable is one that may become invalid due to a variety of legal grounds, such as omission of a crucial fact by one or both sides, erroneous, false, or fraudulent, duress or undue influence. A void contract has no effect when it is first signed.

Understanding voidable contracts is crucial in business law as it highlights the circumstances under which a contract can be declared void. It is essential for businesses to have a clear understanding of these concepts to protect their interests and ensure legal compliance.