Certified Residential Appraiser Practice Exam

When is a contract considered voidable?

1. When it is fully executed

2. When one party opts to void it after performance

3. When legal requirements are not met

4. When both parties agree to cancel the contract

The correct answer is: When legal requirements are not met

A contract is considered voidable when legal requirements are not met, which means it lacks certain essential elements required for a legally binding agreement. These essential elements include competency of the parties, mutual assent, consideration, and a lawful purpose. If any of these elements are missing, the contract can be affirmed or rejected at the option of one party, making it voidable. For example, if one party was coerced into entering the contract, or if they were a minor or mentally incapacitated, that party can choose to void the contract. This flexibility protects parties from being held to agreements that lack proper legal enforceability. In contrast, a contract that is fully executed indicates that all terms have been fulfilled, therefore it can no longer be voidable. Likewise, if one party opts to void a fully performed contract after performance, it typically does not preserve the original terms of the agreement. Similarly, mutual agreement to cancel a contract is often an aspect of contract modification or termination, but it does not apply to the concept of voidability in the same way.