Business litigation is often fraught with technical contract terms, including those that speak to the enforceability of agreements. As noted by a Campbell Law Review Article, the lack of consistent definitions for the contract terms “void” and “voidable” can cause confusion in breach of contract cases.
According to the article, the Restatement (Second) of Contracts provides five situations in which contracts may be ruled voidable:
- Infants’ contracts (i.e. those involving minors).
- Contracts made under duress.
- Contracts based on fraud.
- Contracts based on a mistake.
- Breaches of warranty.
The Restatement’s stance on void contracts is that these agreements do not produce duties of performance or remedies for breach. Essentially, this definition treats void contracts as the opposite of a binding legal agreement.
While attempting to provide definitions for both voidable and void contracts, the Restatement still creates some ambiguity because it is not entirely consistent in its usage of these terms. This is also the case in practical use of the terms, as judges often use them synonymously in their rulings.
The article offers two approaches to the issue. The first—the formalist approach—requires a strict distinction between void and voidable, with careful application of each word to maintain consistency. The second approach is more fluid and accepts a certain amount of inconsistency in the terms’ use.
While the formalist approach would bear the benefits of clear definitions, it may be too rigid to function in an evolving legal system. To succeed, this approach would also require universal adoption of these distinctions, which is not likely.
The discussion on void vs. voidable contracts has been ongoing since before the existence of the United States, and it does not appear to be concluding any time soon. As such, any differentiation for these categories will likely require a case-by-case analysis.