Voidable

A voidable transaction, unlike a void one, is fully valid and binding unless and until the party entitled to challenge it takes steps to have it set aside. Until that election is made, the transaction continues to have legal effect; the innocent party has a choice whether to rescind it (undo it) or affirm it (accept it as binding).

The classic example is a contract induced by misrepresentation. The Misrepresentation Act 1967 confirms that a person who has entered into a contract following a non-fraudulent misrepresentation, and who would otherwise be entitled to rescind the contract without alleging fraud, remains entitled to do so, subject to the provisions of that Act. The Act also gives the court a discretion in such cases to declare the contract subsisting and award damages in lieu of rescission instead, where it considers this equitable having regard to the nature of the misrepresentation and the loss rescission would cause to the other party — illustrating that a voidable contract's fate ultimately depends on how the party affected, or the court, chooses to exercise the available options.