Key Takeaways:

  • A contract must meet specific legal requirements, including offer and acceptance, competency, consideration, and legal purpose, to be valid.
  • Contracts can be void (unenforceable from the start) or voidable (legally binding but subject to cancellation under certain conditions).
  • A contract may be void if it involves illegal activities, a lack of consent, or impossibility of performance.
  • A contract may be voidable due to coercion, fraud, misrepresentation, or lack of legal capacity of one party.
  • Steps to void a contract typically include reviewing the terms, identifying legal grounds, notifying the other party, and seeking legal resolution if needed.
  • Legal remedies for voiding a contract may include rescission, restitution, or court intervention depending on the circumstances.
  • UpCounsel provides access to top attorneys who can help determine the best legal approach for voiding a contract.

Knowing how to void a contract is essential when you need to get out of a contract that is not beneficial to you. The steps to voiding a contract may depend upon the laws of your state. Nevertheless, you should gather enough evidence to support the reasons for voiding a contract and determine whether you need to enter into a new contract.

Basic Contract Elements

A contract is an agreement between two or more parties that must be executed properly by following certain terms and conditions to make it legally acceptable. Upon signing the document, the parties agree to accept certain conditions set out in the contract.

A contract, in order to be legally binding under the state and federal laws, must contain the following basic elements.

Importance of Legal Capacity in Contracts

Legal capacity plays a crucial role in the enforceability of a contract. If one of the parties lacks the necessary legal competence, the contract may be considered void or voidable. Key aspects of legal capacity include:

  • Age Requirement – Minors generally cannot enter into enforceable contracts unless for necessities.
  • Mental Competence – A person suffering from a mental illness or cognitive impairment may not be able to legally consent to a contract.
  • Influence of Drugs or Alcohol – If a person was under the influence during the agreement and lacked understanding, the contract may be voidable.
  • Corporate Authority – A company representative must have proper authorization to sign a contract on behalf of a business.

Offer and Acceptance

One party to the contract places an offer, and the other party accepts it unconditionally. The terms of the contract are usually put down in writing.

Acceptance of the offer is not an instantaneous process. Both the parties negotiate the terms and conditions of the contract before finalizing the deal. The deed is then drafted with a clear mention of the terms agreed upon by both parties.

Object and Competency

  • The agreement done must be for a legal purpose.
  • Both parties must have the freedom to accept the terms; it should not be signed by force.
  • The parties must have attained the age to legally sign a contract.
  • The parties must be mentally stable and competent to execute the contract.

Consideration

Each of the parties must receive something in return. The value that a party receives is called consideration. For example, where one party sells a vehicle to the other party, the agreement contains the price agreed upon by both parties. In this case, the selling party receives money as a consideration while the buyer receives the vehicle. Thus, both parties receive some benefit from the transaction.

The consideration can be in money or kind. It can be anything of value, including proprietary rights, patent, and interest, which will in some way or the other benefit the party.

Written or Verbal

In some cases, state and federal laws can enforce a verbal or oral agreement. However, in most cases, a contract must be in writing to be enforceable. For example, deals associated with a large amount of debt, real estate, and last will and testament must be well-documented.

To conclude, an agreement is valid and enforceable if it is consensual and legal, and signed by two adults with a stable mind, who are competent enough to execute the stated terms and conditions until the end of the contract.

Void Contract

A void contract is outright unenforceable; no state or federal law can enforce it. It's not legally binding on any of the parties to follow the terms of a void contract. Due to some missing terms and conditions in the legal document, the contract may get nullified from the beginning, and the court may not recognize it.

Key Differences Between Void and Voidable Contracts

Understanding the distinction between void and voidable contracts is essential:

  • Void Contract: A contract that is invalid from the beginning and cannot be enforced under any circumstances.
  • Voidable Contract: A contract that is legally valid but can be canceled if one party challenges its legitimacy.
  • Key Differences:
    • A void contract has no legal effect, while a voidable contract remains valid unless one party chooses to nullify it.
    • Void contracts are automatically unenforceable, whereas voidable contracts require an action (rescission) to be invalidated.
    • Contracts involving illegal acts are void, whereas those involving fraud or coercion may be voidable.

When a Contract Becomes Void

  • The terms and conditions are illegal and do not follow state-approved public policy.
  • One of the parties is mentally unstable.
  • Any of the parties have not reached the approved age of consent.
  • Certain terms mentioned in the contract are impossible to perform.
  • The contract puts a restriction on the rights of a party.

Steps to Determine If a Contract Is Void

Before attempting to void a contract, follow these steps to assess its validity:

  1. Review the Contract Terms – Ensure all necessary legal elements (offer, acceptance, consideration) are met.
  2. Check for Legal Violations – If the contract requires illegal activity, it is automatically void.
  3. Assess the Competency of Parties – If one party was underage, mentally incapacitated, or under duress, the contract might be voidable.
  4. Identify Performance Issues – If fulfilling the contract is impossible, it could be voided.
  5. Consult a Legal Expert – Seek professional advice to determine the best course of action.

Example of a Void Contract

If you hire an individual and get a contract signed by him or her to perform an illegal act, the agreement can't be legally enforceable. Since the objective of the contract is illegal, it would be void right from the beginning.

Legal Consequences of a Void Contract

When a contract is declared void, it has no legal standing, meaning:

  • No party is required to fulfill the obligations stated in the agreement.
  • No damages can be claimed by either party for non-performance.
  • Restitution may be required if one party has unjustly benefited from the contract.
  • Businesses should carefully draft contracts to avoid agreements that could be void from the outset.

Voidable Contract

A voidable contract is a legally valid form of agreement that can be enforced by law if all the parties decide to respect the terms of the contract. The party which is legally bound may choose to go ahead with the contract, but the other party may object to it on legal ground. If the party which is not legally bound by the contract rejects it, the contract becomes voidable.

When a Contract Becomes Voidable

  • A party is threatened or forced into signing the contract.
  • A party exerts undue influence over the other.
  • One of the parties is a minor, mentally unstable, or otherwise incompetent to enter into a contract.
  • The terms and conditions of the agreement are violated.
  • Parties commit a mutual mistake.
  • The contract carries distorted facts or is prepared with an intention of not fulfilling the promise.
  • The contract misrepresents facts.

How to Legally Void a Contract

To legally void a contract, follow these steps:

  1. Identify Legal Grounds – Determine whether the contract is voidable due to fraud, misrepresentation, undue influence, or mistake.
  2. Communicate with the Other Party – Express your intention to void the contract in writing.
  3. Collect Evidence – Maintain records proving why the contract should be voided.
  4. Seek Mediation or Negotiation – Many contracts can be resolved without litigation through settlement discussions.
  5. File a Legal Action (if necessary) – If the other party refuses to void the contract, a court ruling may be required.

Frequently Asked Questions

  1. What makes a contract void?
    A contract is void if it lacks legal enforceability due to missing elements, illegality, or impossibility of performance.
  2. Can a contract be voided after being signed?
    Yes, a contract can be voided if it is found to be voidable due to fraud, coercion, or incapacity of one party.
  3. How long do I have to void a contract?
    The timeframe for voiding a contract varies by jurisdiction and the type of contract. Some contracts must be voided within a specific period to be legally recognized.
  4. Do both parties need to agree to void a contract?
    If a contract is void from the start, both parties do not need to agree. However, for a voidable contract, the affected party must take action to void it.
  5. What legal remedies are available if a contract is voided?
    Remedies may include restitution, damages, or equitable relief depending on the circumstances. Seeking legal counsel is advisable to determine the best course of action.

If you need help with how to void a contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.