Factors That Might Make a Contract Unenforceable
Legal Issues That Can Be Used to Void a Contract
In an earlier blog, we looked at the requirements for a valid and enforceable contract. We discussed the requirement that both parties must have the ability (or capacity) to enter into a contract. We said that the subject matter of the agreement must be legal, and the both parties must have voluntarily agreed to the terms. In this article, we look at some of the arguments you can raise to challenge the validity of an agreement.
Mistake
Suppose that you enter into an agreement to purchase “the Picasso painting.” The terms are no more specific than that. You believe it’s “The Old Guitarist,” but the seller insists it’s a lesser-known painting from earlier in Picasso’s career. Provided there’s no evidence that the disagreement is the result of an intentional act (it would then be misrepresentation/fraud), the mistake may be sufficient to void the contract. It must relate to a material element of the contract, and it must have had a significant impact on the bargaining process.
Impossibility
Occasionally, circumstances change after you enter onto an agreement, making it extremely difficult, expensive or even impossible to perform as agreed upon. For example, you may enter into a contract to purchase 10,000 widgets from a supplier, only to have the supplier’s factory burn down a week before delivery. Even if your supplier can still deliver in a timely manner, if it will be unreasonably expensive for them to do so, the court may determine the contract is unenforceable.
Unconscionability
Though parties are generally given great latitude when entering into a contract, even to the point where one party may make a horribly bad deal, there are situations where the court may step in and find the agreement to be unenforceable due to unfairness. The application of this principle is typically limited to instances where one side had most or all of the bargaining power, or where one party had problems (due to language barriers, for example) understanding the terms of the agreement.
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