Introductory Business Law CLEP Prep Practice Exam

A “voidable” contract is one

1. that is illegally obtained by force

2. that can be cancelled at any time

3. that cannot be enforced by either party

4. that has been declared illegal

The correct answer is: that has been declared illegal

A "voidable" contract is a contract that is considered to be valid and legally binding, but has certain unacceptable terms or illegal aspects that allow one or both parties to cancel or annul the contract at any time. This means that Option A, which suggests that the contract is illegally obtained by force, is incorrect as this would make the contract void and not just voidable. Option B, which suggests that the contract can be cancelled at any time, is incorrect as this implies that a voidable contract is always subject to cancellation, which is not the case. Option C, which suggests that the contract cannot be enforced by either party, is also incorrect as voidable contracts can still be enforced until they are cancelled or annulled. Therefore, the most appropriate answer is Option D, as it identifies the illegal aspect of a voidable contract that leads to its cancellation.