A contract is a documentation of an agreement between two private parties. This document creates mutual legal obligations, and can be either oral or written. However, oral contracts are more challenging to enforce and should be avoided whenever possible. Some jurisdictions do not recognize oral contracts as legally enforceable at all.
All valid contracts must include the following elements in order to be legally enforceable:
- An offer, such as one party paying another $1,000 for 1,000 units;
- An acceptance of the offer presented, such as one person accepting $1,000 for 1,000 units;
- A promise to perform;
- A valuable consideration;
- A time or an event of when the performance must be made, such as 1,000 units exactly two weeks from signing the contract;
- Terms and conditions for the performance; and
- Performance, or, the 1,000 units are delivered and the person is paid $1,000.
Courts will not enforce certain contracts unless they are in writing. This is because certain contracts fall under the Statute of Frauds, meaning they must be in writing to be valid and binding. Examples of such contracts include:
- Marriage contracts;
- Contracts not to be performed within one year;
- Interest in land contracts;
- Paying decedent’s debt guarantees; and
- The sale of goods contracts over a specific amount, generally over $500.
What Is the Difference Between Void and Voidable? When Is a Contract Considered Void or Voidable?
The terms “void” and “voidable” are often confused for each other, or used interchangeably. Although these two types of contract seem similar, they are quite different.
A contract that is considered to be void cannot be enforced by either party. The contract has been rendered unenforceable. Under law, void contracts are treated as if they had never been formed. An example of when a contract will be considered void would be if the contract requires one party to perform an act that is impossible, or illegal.
Such contracts would be considered “void on its face.” What this means is that the contract is voided as written, and cannot be changed or amended. Generally speaking, the court will entirely cancel such contracts. No damages are available for breach of a void contract due to the fact, essentially, there was no contract to breach.
Alternatively, a voidable contract is a valid contract that can still be enforced. Generally speaking, only one party is bound to the contract terms contained within a voidable contract. The unbound party, then, is allowed to cancel the contract. This is what makes the contract void.
To further clarify the difference between the two, a void contract can no longer be performed under the law, while a voidable contract can. However, the unbound party to the contract may choose to void it before the other party can perform.
Void contracts are unenforceable by law, and are invalid. Some examples of void contracts include:
- Contracts involving an illegal subject matter, such as drug dealing, illegal gambling, or committing a crime;
- Contracts which are entered into by someone not mentally competent, such as those with mental illness, or minors;
- Contracts that require an impossible performance, or the performance is dependent on an impossible event happening;
- Contracts that are against public policy, such as when they are too unfair; and
- Contracts that restrain certain activities, such as the right to choose who to marry, restraining legal proceedings, and the right to work to earn a living.
Voidable contracts are valid agreements; however, one or both of the parties to the contract can void the contract, and at any time. Some examples of when you may be unable to enforce a voidable contract include:
- The contract was entered into when one party was a minor, as the law often treats minors as though they do not have the mental capacity to enter into a contract;
- One party was forced or tricked into entering the contract; and
- One party was incapacitated in some way, such as drunk, insane, or delusional, when entering into the contract.
In some cases, the court may allow parts of the contract to be rewritten. Legal remedies will vary, depending on the circumstances of the contract. An example of a voidable contract would be a contract entered into by a minor, as previously mentioned.
Some states have determined that an individual is considered to be a minor until the age of 18, while the age differs in other states. The minor could decide to breach the contract, at any time, without facing any legal consequences for breach of contract.
What If I Need to Void a Contract?
Generally speaking, whether a contract is void or voidable, the process is the same. It is necessary to file a request with the court in order to have the contract reviewed. This will help the court determine whether the contract is void or simply voidable, and what other remedies could be available. An example of this would be how a damages award may be available for extra losses that were caused by a breach of contract, but only in specific circumstances.
If you find yourself needing to have a contract voided, you should refer to your copy of the contract, as well as any other important documents from the contract formation process. Additionally, you should keep records of receipts, bills, and other documents proving any losses that you have incurred as a direct result of being involved with the contract.
To simplify, the process of having a contract voided generally follows these steps:
- The contract is reviewed for terms or factors that may cause it to be invalid;
- Determination of a legal reason as to why the contract should be void, such as duress at the time of signing;
- Collection of documents and information supporting that reason; and
- Determining whether an entirely new contract is needed, or portions of the contract should be rewritten. Alternatively, the contract may be abandoned altogether.
Each state maintains different laws regarding contracts, business matters, and commerce regulation. This is because each state has different commercial needs.
Additionally, death does not void all contracts. The death of a party to the contract does void certain contracts, but not all. Some examples of contracts that may be valid after the death of a party include:
- Conditions of a Decedent’s Will: If a donation to be paid over time is outlined in a will, this creates a contract. In this contract, the estate must continue making the donations, even after the individual’s death; and
- Joint Contract: The most common example of this would be where two individuals, such as a married couple, have a mortgage on a home. When one spouse dies, the living spouse is obligated to continue making mortgage payments.
Do I Need a Lawyer for Assistance With Void or Voidable Contracts?
If you are involved in a contract dispute, and need to know if the contract is void or voidable, you should consult with a local contract lawyer. An experienced and local contract attorney will be best suited to understanding your state’s laws regarding the matter, and how that may affect your case moving forward.
Alternatively, you may decide to consult with a contract attorney prior to entering into a contract. An attorney can review the terms of the contract to ensure they are in your best interests, and advise you against signing anything that could be unenforceable later on.