What is the difference between a void and a voidable contract?

Question

José Manuel Alburquerque · Accepted Answer

A void contract has never been valid, because it lacks a requirement, such as consent, subject matter or cause (consideration), or because it is contrary to a law that cannot be overridden by agreement. A voidable contract meets all the requirements and is valid, but it has a defect, such as having been signed by mistake, as a result of deception or under intimidation, that allows the injured party to ask for it to be annulled. Nullity can be relied on by anyone with an interest and is not subject to any time bar, whereas annulment can only be sought by the protected person and within four years. Once either has been declared, each party must return what they received. Void contracts In Catalonia, as in most of the rest of Spain, nullity and voidability are governed by the Spanish Civil Code (“Código civil”), because the “Código Civil de Cataluña”, the Catalan Civil Code, has no general rules on them. The following, for example, are void: A contract that lacks consent, subject matter or cause, such as the sale of something that does not exist and cannot come into existence, or a sale for a price that cannot be determined. A contract with an unlawful cause. A contract that breaches a mandatory or prohibitory rule, that is, one that cannot be overridden by agreement, unless the rule itself provides for a different consequence. A sham sale, signed only for appearances, for example so that creditors cannot find any assets. A void contract has no effect from the outset. The court can find the contract void even if nobody raises the point, the contract cannot be confirmed and the action to have it declared void is not subject to any time bar. Even so, it is best not to wait, because until it is declared void the other party may act as if the contract were valid. Sometimes only one clause is void, for example an unfair term in a contract between a business and a consumer. It is then treated as not included and the rest of the contract remains valid. Voidable contracts A voidable contract meets the three requirements, but there is a defect in the consent or capacity of the person who signed it. This is the case with serious mistake, deception, violence or intimidation. It is also the case with contracts made by a minor or by a person who acted without the support they needed. It differs from a void contract in these respects: It is valid and has effect until it is annulled. Only the person whom the law protects can ask for it to be annulled. Whoever deceived or intimidated cannot do so. The action expires after four years. The time limit is the same in Catalonia. It can be confirmed, either expressly or by performing the contract once the defect is known and has ceased, for example once the intimidation has stopped. From then on it can no longer be annulled. The Spanish Civil Code often calls the action for annulment an “acción de nulidad” (action for nullity). What decides whether a contract is void or voidable is not the word used but the defect it has. What happens once it is declared Once nullity or annulment has been declared, the parties must return to each other what they received, the thing with any income it has produced and the price with interest. If the thing cannot be returned, its value is paid. There are exceptions. A minor and, in some cases, a person who acted without the support they needed only return what they were enriched by. If the contract was unlawful, whoever acted knowingly may lose what they handed over.