Understanding Unenforceable Contracts: Types & Implications

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Contracts are agreements between two or more parties that create legally binding obligations. They can be written, oral, or implied by conduct. However, not all contracts are enforceable in a court of law. Some contracts are considered unenforceable due to certain legal principles. In this article, we will discuss the different types of unenforceable contracts and their implications.

Types of Unenforceable Contracts

1. Illegal Contracts

Illegal contracts are those that involve illegal activities. These contracts are considered unenforceable because courts do not want to encourage or support illegal behavior. Examples include contracts for criminal acts, contracts that violate public policy, or contracts that require a party to engage in an immoral or unethical activity.

Implications:

• Parties involved in illegal contracts cannot enforce the contract in a court of law.
• If a party has already performed their part of the contract, they may not be able to recover payment for their services.
• Engaging in illegal contracts can have serious legal consequences.

2. Contracts with Minors

A contract with a minor, someone under the age of 18, is also generally considered unenforceable. This is because minors are not considered legally competent to enter into contracts. There are some exceptions, such as contracts for necessary goods or services, but for the most part, minors cannot enter into contracts that are enforceable in a court of law.

Implications:

• Parties cannot enforce contracts with minors if the minor chooses to back out of the agreement.
• A minor who enters into a contract can disaffirm, or cancel, the contract at any time before reaching the age of majority.
• A minor can still be held responsible for damages caused by their breach of contract.

3. Contracts with Mentally Incapacitated Individuals

Similar to minors, individuals who are mentally incapacitated may also lack the legal capacity to enter into enforceable contracts. This includes individuals who are mentally ill, intoxicated, or under the influence of drugs.

Implications:

• Contracts with mentally incapacitated individuals may not be enforceable in a court of law.
• If a party is aware of the other party’s mental incapacity at the time the contract is formed, the contract may be voidable at the incapacitated party’s option.
• The incapacitated party can still be held responsible for damages caused by their breach of contract.

4. Contracts with Duress or Undue Influence

Contracts that are entered into under duress or undue influence are also considered unenforceable. Duress involves threats of harm, while undue influence involves taking advantage of someone’s weakness to get them to enter into a contract.

Implications:

• Contracts that are entered into under duress or undue influence may be voidable at the option of the disadvantaged party.
• The party that used duress or undue influence may be liable for damages caused by their actions.
• Courts may also refuse to enforce contracts that are unconscionable, or extremely one-sided and unfair.

Conclusion

In conclusion, unenforceable contracts are those that cannot be enforced in a court of law due to certain legal principles. These include illegal contracts, contracts with minors or mentally incapacitated individuals, and contracts entered into under duress or undue influence. Parties should be aware of these types of contracts and their implications before entering into any agreements. When in doubt, it’s always best to seek the advice of a legal professional.