What distinguishes a voidable contract?

A voidable contract is characterized by the fact that one party has the option to either void or enforce the agreement. This typically occurs when certain circumstances—such as misrepresentation, duress, or undue influence—affect one party's ability to give meaningful consent. In such cases, the party with the option can choose to affirm the contract and hold the other party to its terms or decide to void it, rendering the contract unenforceable.

This distinct feature is what makes option B the correct choice. The presence of this choice is crucial because the ability to void the contract provides a remedy for situations where consent was compromised or where one party entered the agreement under questionable circumstances.

The other options do not accurately describe the nature of a voidable contract. It is not always enforceable by both parties, as option A suggests, because one party has the ability to void it. Option C incorrectly states that a voidable contract lacks any binding effect; it is indeed binding unless the party with the option chooses to void it. Lastly, option D mentions government regulation, which does not apply to voidable contracts in general. Therefore, option B is the only choice that correctly identifies the key characteristic of a voidable contract.