SACE Stage 1 Legal Studies Practice Exam 2025 – Complete Prep Guide

When a contract is described as 'voidable', it means that it is a valid agreement that can be enforced or voided at the option of one of the parties involved. This typically occurs in situations where one party may have been misled, suffered undue influence, or lacked the capacity to enter into the contract. As a result, while the contract stands as valid initially, it provides the right for one party to choose whether to affirm or terminate the agreement.

Choosing to void the contract can occur without court intervention, although if there is a dispute regarding that choice, the court may become involved later. The existence of the voidable status gives an affected party the power to seek to rescind the contract based on the circumstances that allow for such action.

In this context, it is evident why the other options do not align with the definition of a voidable contract. For example, a contract that is automatically invalid refers to a 'void' contract, which cannot be enforced at all from the outset. Additionally, voidable contracts do not inherently require court approval to be effective; they can simply be reaffirmed or voided by the affected party. Lastly, the term does not specifically reference a type of verbal agreement, as voidable contracts can be both