A contract is an agreement between two or more parties that can be in written or oral form. In order for a contract to be valid and enforceable, it must include:
- An offer and acceptance;
- Parties with the capacity to contract; and
- Mutual assent, or meeting of the minds.
There may be a circumstance that makes a contract null and void. A void contract is no longer valid or legally enforceable under state or federal laws. Contracts may become void if they:
- Are against prevailing public policies;
- Are severely one-sided;
- Involve illegal activities or crimes;
- Were agreed to by parties who are not competent to contract, such as minors;
- Are impossible to perform; and/or
- Restrict certain rights, such as the right to work.
A contract containing any of these elements is considered “void on its face.” This means the contract is voided as written and cannot be changed or amended. In most cases, the court will cancel these contracts entirely.
The law treats a void contract as though it had never been entered into. No damages are available for breach of a void contract because, essentially, there was no contract to breach.
When Does a Contract Become Void?
A contract becomes void under the circumstances listed above. Should a party need to void a contract, they may have to file a request with the court to have the contract reviewed. The court can determine if the contract is void, voidable or if other remedies are available. Many contracts include sections that instruct parties whether or not the contract can be voided and how to do so.
It is important to keep copies of any contract and supporting documentation. It is also important to keep any bills, receipts or other financial documents that may be generated as a result of the contract.
Contracts will be voided if there is a mistake or fraud by one of the parties. Contracts may also be voided if a party entered into a contract under duress.
Another type of contract that can be void is an unconscionable contract. This type of contract is considered so one-sided that it would be unfair to one party and is therefore unenforceable under the law. This type of contract results in one party having no real, meaningful choice, in most cases due to a large difference in bargaining power between the parties.
In some cases, a contract may be considered a “void ab initio contract.” This means the contract was invalid from the outset. In many jurisdictions, a contract that is signed under duress is considered to be void ab initio.
Examples of void contracts include contracts that are entered into by parties that are not legally competent to contract. These may include individuals who are mentally incompetent or minors.
What Does “Voidable” Contract Mean?
There is a difference between a void contract and a voidable contract. A void contract, as noted above, is not legally enforceable. A voidable contract is a contract that is valid, but can be voided at the election of one of the parties to the contract. A voidable contract is valid and can still be performed unless the non-breaching party elects to void the contract. Voidable contracts may include issues such as:
- A party to the contract was not of legal age at the time they entered into the contract;
- A party entered into the contract under condition of coercion or trickery; and/or
- A party did not have the required mental capacity to enter into a contract, such as being under the influence or drugs or alcohol.
A voidable contract can be considered “voidable at the election” of a party to the contract. In certain cases, the court may allow parts of the contract to be rewritten. Legal remedies, such as damages for breach of contract, will vary depending on the circumstances of the contract.
An example of a voidable contract is a contract entered into by a minor. In some states, an individual is considered a minor until the age of 18, but that age differs. In those cases, the minor can decide to breach the contract at any time without facing legal consequences for breach of contract.
There are some instances, such as a minor entering into a contract for necessities like food, clothing and shelter, where the contract may not be voidable. These exceptions may also apply to individuals who do not have the mental capacity to enter into a contract without a guardian or representative present.
What Are the Steps for Voiding a Contract?
If an individual determines a contract they entered into needs to be voided, there are steps they can take, including:
- Review the contract for terms or factors that may cause it to be invalid;
- Determine a legal reason why the contract should be void, such as duress or a party being under the influence at the time of signing;
- Collect documents and information supporting the legal reason the contract should be void; and
- Determine whether an entirely new contract is needed, portions of the contract should be rewritten or the contract should be abandoned all together.
Each state has different laws regarding contracts, business matters, and the regulation of commerce because each state has different commercial needs. Should a contract be voided totally, neither party will benefit from the agreement that was to take place under the contract terms.
Does Death Void All Contracts?
No, death does not void all contracts. Death of a party voids certain contracts but not all types. In some cases, the executor or other successor of the decedent must perform the contractual duties of the dead party. An exception to this is personal service obligations.
In the event of the death of a party to the contract, the executors, attorneys and courts may be required to determine whether a contract was personal or impersonal. There may be times where performance of a contract after the death of a party would not benefit the parties, such as if the decedent was contracted to perform a specific skilled labor.
Examples of contracts that may be valid after the death of a party include conditions of a decedent’s will and joint contracts. A donation to be paid over time outlined in a will creates a contract even after the individual passes away where the estate must continue making the donations even after the individual’s death.
A second example of a contract that may be valid after the death of an individual includes a joint contract where two individuals, such as a married couple, have a mortgage on a home. Even after the passing of a spouse, the other spouse is obligated to continue making mortgage payments.
Do I Need a Lawyer for Help with Contract Issues?
Contracts and contract laws can be complex and difficult to navigate. A business lawyer can assist with the evaluation of your case and help determine if you have a void agreement or an enforceable contract. A business lawyer can also assist in creating, drafting or editing a contract.
A business lawyer can ensure that the contract is valid and enforceable under local and/or federal law. Should a breach of contract occur, a business lawyer can provide legal representation during court proceedings.