PSI Virginia Real Estate Practice Exam

What distinguishes a void contract from a voidable contract?

1. A void contract is enforceable; a voidable contract is not

2. A void contract is legal; a voidable contract is illegal

3. A void contract is unenforceable; a voidable contract is enforceable

4. A void contract allows recourse; a voidable contract does not

The correct answer is: A void contract is unenforceable; a voidable contract is enforceable

A void contract is fundamentally different from a voidable contract based on their enforceability and legal status. A void contract is an agreement that is not legally enforceable from the moment it is created, meaning that it lacks legal validity due to reasons such as being formed for an illegal purpose, involving parties that are not legally capable of entering into a contract, or failing to meet required elements of a valid contract (like consideration). As such, neither party has the right to enforce the terms of a void contract. In contrast, a voidable contract is one that is valid and enforceable on its face, but one party has the legal right to reject or void it. This can be due to specific reasons such as misrepresentation, undue influence, or the capacity of a party to contract. Until the party with the right to void the contract exercises that right, the contract remains enforceable. This distinction highlights that while a void contract simply cannot be enforced under any circumstance, a voidable contract can be upheld if the party with the option to void it does not choose to do so. Therefore, understanding these differences is crucial when dealing with contractual agreements in real estate and other legal contexts.