Enforceability

Enforceability

Enforceability of Contracts

Not every agreement between two people is a binding contract. An agreement that is lacking one of the legal elements of a contract is said to be void—that is, not a contract at all. An agreement that is illegal—for example, a promise to commit a crime in return for a money payment—is void (as said, an agreement that never was a contract). Neither party to a void “contract” may enforce it.

By contrast, a voidable contract (i.e. a contract that can be annulled) is one that is unenforceable by one party but enforceable by the other. For example, a minor (any person under eighteen, in most states) may “avoid” a contract with an adult; the adult may not enforce the contract against the minor, if the minor refuses to carry out the bargain. But the adult has no choice if the minor wishes the contract to be performed. (A contract may be voidable by both parties if both are minors.) Ordinarily, the parties to a voidable contract are entitled to be restored to their original condition. Suppose you agree to buy your seventeen-year-old neighbor’s car. He delivers it to you in exchange for your agreement to pay him next week. He has the legal right to terminate the deal and recover the car, in which case you will of course have no obligation to pay him. If you have already paid him, he still may legally demand a return to the status quo ante (previous state of affairs). You must return the car to him; he must return the cash to you.

A voidable contract remains a valid contract until it is voided. Thus, a contract with a minor remains in force unless the minor decides he does not wish to be bound by it. When the minor reaches his majority, he may “ratify” the contract—that is, agree to be bound by it-in which case the contract will no longer be voidable and will thereafter be fully enforceable.

An unenforceable contract (i.e. a contract for which the non-breaching party has not remedy for its breach) is one that some rule of law bars a court from enforcing. For example, Thomas owes John money, but John has waited too long to collect it and the statute of limitations has run out. The contract for repayment is unenforceable and Pete is out of luck, unless Thomas makes a new promise to pay or actually pays part of the debt. (However, if John is holding collateral as security for the debt, he is entitled to keep it; not all rights are extinguished because a contract is unenforceable.) (1)

Resources

Notes

  1. “Business and the Legal Environment”, by Don Mayer, Daniel M. Warner and George J. Siedel.

See Also

  • Nullifying Contracts
  • Breach Of Promise
  • Exclusive Patronage Contract
  • Contract
  • Contract Types

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