Voidable Contract
1. Introduction
A voidable contract is a valid
contract that one or both parties can either enforce or void due to certain
legal defects. Unlike a void contract, which is unenforceable from the
beginning, a voidable contract remains valid until it is legally rescinded by
the affected party.
📌 Definition: According to Section 2(i) of the
Indian Contract Act, 1872, a voidable contract is “an agreement which is
enforceable by law at the option of one or more parties, but not at the option
of the other(s).”
📌 Abbreviation & Meaning:
- Voidable Contract (V.C.): A contract that
is initially valid but can be canceled under specific conditions.
- Void vs. Voidable: A void contract is
legally unenforceable, whereas a voidable contract is enforceable unless
the aggrieved party chooses to rescind it.
2. Explanation
A contract may become voidable due to
the following factors:
✅ Coercion – If one party forces the other to
enter the contract against their will.
✅
Undue Influence – If one party unfairly influences the other due to a dominant
position (e.g., employer-employee, doctor-patient).
✅
Fraud – If one party deceives the other by misrepresenting facts.
✅
Misrepresentation – If false statements lead the other party to agree.
✅
Mistake – A contract based on a fundamental mistake of fact may be voidable.
💡 Example:
A minor enters into a contract to buy a car. Later, upon reaching legal age,
they can either affirm the contract or declare it void, making it a voidable
contract.
3. Significance in Real Life
- Business Contracts – Companies may enter
voidable agreements due to misrepresentation.
- Property Transactions – If a seller hides
legal issues, the buyer may void the contract.
- Employment Agreements – If an employee is
forced to sign a contract under duress, it can be voided.
- Loan Agreements – If fraud is involved,
the contract can be set aside.
Voidable contracts protect parties
from unfair transactions and help maintain fairness in contractual
relationships.
4. Case Example
📌 Case: Ranganayakamma v. Alwar Setti (1889)
📌 Parties Involved:
- Plaintiff: Ranganayakamma
- Defendant: Alwar Setti
📌 Issue & Dispute:
A widow was forced to adopt a boy immediately after her husband's death. She
later challenged the adoption, arguing she was coerced into giving consent.
📌 Scenario Explanation:
- The widow’s consent was obtained under
coercion.
- Under the Indian Contract Act, coercion
makes a contract voidable at the affected party’s option.
- She sought to declare the adoption
voidable.
📌 Verdict:
The court ruled that since consent was obtained through coercion, the agreement
was voidable at the widow’s discretion.
📌 Analysis:
- This case highlights that contracts
formed under coercion can be legally rescinded.
- Lesson Learned: A party forced into a
contract has the legal right to void it.
5. Conclusion
- A voidable contract is initially valid
but can be voided by the affected party.
- It arises from coercion, fraud,
misrepresentation, undue influence, or mistake.
- Courts uphold the right of an aggrieved
party to rescind such contracts.
- Protecting fair consent ensures contracts
remain just and enforceable.
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