Contracts and Sales Multistate Bar Practice Exam

What distinguishes a voidable contract from a void contract?

1. A voidable contract cannot be enforced by either party

2. A voidable contract may be voided by one or both parties

3. A voidable contract exists only verbally

4. A voidable contract is enforceable only in court

The correct answer is: A voidable contract may be voided by one or both parties

A voidable contract is indeed distinguished from a void contract primarily by the fact that it may be voided by one or both parties involved. In legal terms, a voidable contract is valid and enforceable until one party elects to void it due to certain factors, such as misrepresentation, undue influence, or incapacity. This means that there is an option for the party affected by those issues to choose whether to continue with the contract or to cancel it. In contrast, a void contract is treated as if it never existed from the outset. It has no legal effect and cannot be enforced by either party. By recognizing that a voidable contract can still be operational until someone decides to void it, the distinction becomes clear. The option for a party to affirm or reject the contract creates a layer of flexibility that is not present in a void contract, which holds no legal standing whatsoever. Understanding this concept is crucial for navigating contract law, as it highlights the rights and responsibilities that come with various circumstances influencing contractual agreements.