A contract is likely to be voidable when there is an imbalance in power dynamics between the parties involved, which can lead one party to enter into the contract under duress, misrepresentation, or undue influence. In such scenarios, a party may feel compelled to agree to the terms due to pressure or circumstances that significantly disadvantage them. This allows the affected party the right to rescind the contract if they choose to exercise that option.
The presence of unequal power dynamics undermines the fundamental principle of mutual consent, which is crucial for a valid contract. When one party can exploit their position over the other, the contract lacks the necessary elements of fairness and equity, making it voidable at the discretion of the weaker party. Thus, the existence of these unequal power dynamics provides a solid foundation for the assertion that the contract can be rescinded.
In contrast, equally informed and consenting parties, or situations where one party's financial situation changes significantly, do not necessarily create grounds for a voidable contract. Similarly, mutual abandonment of a contract does not establish any issues regarding consent or power imbalance, and therefore does not lead to a voidable circumstance.