What kinds of contracts might not hold up in court?
Because a contract is a legally binding agreement, you and the other party are both expected to meet the conditions of the contract after you enter into one with another person or firm. However, it is possible for a contract that is otherwise lawful to be found unenforceable in the eyes of the law, and this article examines some common scenarios when this may occur.
Lack of Capacity
Both (or all) parties to a contract should be able to grasp exactly what they're agreeing to. If it shows that one party lacked this ability for thinking, the contract may be declared unenforceable against that person. When one party to a contract is too young or lacks the mental capacity to fully comprehend the arrangement and its repercussions, the problem of capacity to contract arises. The overall goal is to protect someone who lacks the ability to make a rational decision from being used by someone who is unscrupulous.
When someone was threatened into making a contract, duress, or coercion, will invalidate the agreement. A shipper (Company A) agreed to convey a particular amount of Company B's products, which would be used in a significant development project, under duress. Company A refused to continue the voyage unless Company B agreed to pay a greater price once Company B's project was begun and Company A's ship was en route with the goods. Company B was forced to pay the exorbitant amount since there was no other way to obtain the material and failing to finish the task would result in unsustainable losses. Because the agreement to raise the price was reached under pressure, the court determined that it was unenforceable. Blackmail is another prominent manifestation of duress.
If Person B used a special or particularly persuasive relationship with Person A to force Person A to engage into an agreement, the ensuing contract may be declared unenforceable on the grounds of undue influence. Person A would have to show that Person B used excessive pressure against Person A during the bargaining process, and that Person A was overly susceptible to the pressure tactics for whatever reason — or that Person B used a confidential relationship to exert pressure on Person A to prove undue influence.
Any contract that results from fraud or deceit during the negotiation process will very certainly be declared unenforceable. The goal is to promote fair and honest negotiations and transactions. Misrepresentations are common when a party says something false (for example, telling a potential buyer that a house is termite-free when it isn't) or conceals or misrepresents a situation in some other way (for example, concealing evidence of structural damage in a house's foundation with paint or a specific placement of furniture).
When someone fails to disclose a critical detail about the contract, nondisclosure is effectively misrepresentation by silence. Courts evaluate a number of factors when determining whether a party had a responsibility to disclose information, but they also consider whether the other party had or should have had easy access to the same information. It's worth noting that parties are only required to reveal material facts. However, if Party A directly inquires about a fact (material or non-material), Party B owes it to Party A to tell the truth.
A lawsuit for breach of contract may be initiated when contract problems entail dishonest practices such as deception or nondisclosure, and one party of the agreement has already experienced financial losses as a result.
Unconscionability refers to a contract term or something inherent in or about the agreement that was so startlingly unfair that it could not be permitted to remain. Again, the goal is to maintain justice, so a judge will look at:
If a court finds a contract to be unconscionable, it has options other than just nullifying it. It could, for example, choose to enforce the contract's conscionable sections while rewriting the unconscionable provision or clause.
Contracts can be declared unenforceable on public policy reasons not only to protect one of the parties involved, but also because the contract's terms potentially harm society as a whole. A court will never enforce a contract that promotes something that is already unlawful under state or federal law (for example, a contract for the sale of illegal marijuana) or an agreement that offends "public sensibilities" (contracts involving some sort of sexual immorality, for example). Other contracts (or contract clauses) that are unenforceable because they violate public policy include:
A contract may be unenforceable not because one party acted in bad faith on purpose, but because one party (called a "unilateral mistake") or both parties made a mistake (called a "mutual mistake"). In either situation, the blunder had to be related to the contract in some way, and it had to have had a major (large) impact on the exchange or negotiation process.
In some situations, a contract is considered unenforceable because carrying out its provisions would be impossible or impractical — for example, because it would be too complex or expensive. To prove impossible, you'd have to demonstrate that:
For example, if Company A agrees to sell 20 barrels of flour to Company B but a natural calamity destroys Company A's entire store of flour before the sale can be completed, Company A may be entitled to have the contract declared unenforceable due to impossibility.
Yoel Molina, Esq. (AKA “Mo”)
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Yoel “Mo” Molina, I am a lifelong resident of Miami, Fl. I am a graduate of Miami Senior High, Class of 1992, Georgia Institute of Technology, B.S. 1997 and University of Maine School of Law, J.D. 2001. I have been practicing law in Miami Since 2001. I am a former training prosecutor in the Miami-Dade State Attorney’s Office. I have experience in jury trials, appeals, and administrative hearings. I have appeared before judges across the State. My experience ranges from civil litigation matters, collection matters, foreclosure, business and corporate, contracts, real estate, leases and employment matters..
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"My name is Anastasia Yecke Gude and I am the owner of Healing Hands Therapeutic Massage LLC. In the process of my company’s growth and expansion, I suddenly found myself a few weeks ago in need of a 1099 contractor agreement, and I needed it ASAP. As in, the very next day! I contacted the Law Office of Yoel Molina and his assistant put me in touch with Mo. I sent him what I had drafted up and he replied within a few hours with suggested revisions and clarifications, as well as a few insights I had not even considered. I was thoroughly impressed by the quality of work he provided, especially considering the time crunch I put him in (sorry, Mo!). I definitely recommend his services to anyone in need of a good contract attorney, and I will be calling him again for future work…hopefully in less of a rush next time!"