What is a voidable contract?

A voidable contract is defined as an agreement that may be declared invalid at the option of one party due to certain circumstances. This means that while the contract is initially valid and enforceable, there are specific conditions or factors—such as misrepresentation, undue influence, or coercion—that give one party the right to void the agreement. The key aspect is that the party with the option can choose to either affirm the contract and hold the other party to it or to rescind it, thus releasing them from any obligations.

Understanding this concept is crucial in contract law because it highlights the rights of parties involved in agreements and the protections available under certain circumstances. A voidable contract contrasts with a void contract, which is invalid from its inception and cannot be enforced by any party. This distinction is essential for recognizing the potential for enforceability depending on the context in which the contract was made.

The other options suggest different interpretations. A contract that is illegitimate from its creation describes a void contract rather than a voidable one. The requirement of mutual consent pertains to the formation of a valid contract but does not specifically address the unilateral right to void an agreement. Lastly, a valid agreement that can never be terminated does not accurately reflect the nature of a voidable contract