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Free Books / Finance / Elementary Banking / | ![]() |
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Void Versus Voidable Contracts |
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This section is from the book "Elementary Banking", by John Franklin Ebersole. Also available from Amazon: Elementary Banking.
There is an important distinction between "void"and "voidable" contracts. Confusion sometimes arises from the failure to understand the difference. A contract is void when the law declares it to be so absolutely - there is no contract whatever and no change in the legal position of the parties; it cannot be ratified. A voidable contract, on the other hand, binds one party but not the other; it is valid until it is avoided by the party entitled to avoid it (refuse to do his part). Until thus disaffirmed it is binding. It may be ratified. Thus, A agrees to sell a $5,000 automobile to B, a minor (not yet 21 years of age). A is bound to furnish the automobile and cannot plead that B was not of age; B may refuse to take the automobile, in which case A is helpless; B may ratify after becoming of age - that is, agree to fulfill his part of the contract he had entered into when a minor. As we shall see later, a minor is bound to pay for necessaries, but even then only a reasonable price. For instance, B, a minor, agrees to purchase a $30 suit from A, who furnishes the suit. B then tries to avoid paying for it, alleging that when he entered into the contract he was a minor and therefore could not be bound on the contract. He will be compelled to pay A for the suit, but only what it is worth - the reasonable value - regardless of the fact that he had agreed to pay $30.
 
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banking, finance, acceptances, accrued items, audit, bank departments, bank ledgers, bank statements, bills of lading, checks, bookkeeping, deposits, discount, drafts, contracts, exchanges, federal reserve bank, operations, promissory notes, law, transfers
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