Texas A&M University (TAMU) MGMT209 Practice Exam

A voidable contract is one that is valid and can be enforced, but it also allows one of the parties involved the option to reject it. This typically occurs in situations where one party may have entered into the contract under duress, fraud, misrepresentation, or where they lacked the capacity to contract. For example, a minor entering into a contract may have the ability to void that contract upon reaching legal age. This characteristic of being enforceable at the discretion of one party is what distinguishes a voidable contract from other types such as void or unenforceable contracts.

A valid contract, while enforceable by both parties, does not include this clause of unilateral rejection. A void contract is one that is not legally binding from the start and cannot be enforced by either party. An unenforceable contract is one that, despite being valid, cannot be enforced in a court of law due to some legal technicalities. Thus, the term voidable accurately captures the essence of a contract that allows one party the option of enforcement or rejection.