Contracts are complex legal documents. The legal agreement contains terms, language that outline and define what each party must meet. This means mutual obligations must be enforceable by law. When a contract is deemed unenforceable, it may be a case of void contract.
What is a Void Contract Case?
Void cases of legal agreements mean they are legally unenforceable because they were illegitimate from the moment of their creation. Void contracts may involve illegal elements, or they may violate contract law, against fairness or public policy.
Cases of void contracts happen when key elements of the legal document are compromised:
- An exchange of value – both parties must benefit from the contract. If one party is getting more at the expense of the other party, the contract may be null and void. This is also known as a lack of consideration.
- Complete – a contract must be detailed, specific and complete. Otherwise, a court may not enforce it.
- Acceptance of offer – both parties must accept all points prescribed in the contract. Each one must also be aware of what their acceptance entails. If not, a business lawyer could make a case in court to void the agreement.
- Legal object – no court of law will uphold any contract with an illegal subject matter. Contracts on the sale of illegal or stolen goods; on the employment of one party to commit a crime, such contracts are illegal and void.
When one party is incapable of understanding the nature and implications of agreeing to a contract, that agreement may be deemed void by a court of law.
One example is a mentally incapacitated person signing off their rights to an estate without receiving an explanation as to its impact in their life or what they may be giving up. In such an instance, the agreement may be declared void ab initio (from the beginning); that the contract was not valid and enforceable from the moment of its inception.
But some contracts may not be entirely null and void.
Void vs. Voidable
Some contracts may be void but others may be voidable. What’s the difference between the two legal terms?
A voidable contract is enforceable and valid unlike a void contract. Some questionable terms may provide you with an opening to render it void. You may have a right to end it with the help of an experienced business attorney.
You may have a voidable case for a contract if:
- The other party misrepresented information or failed to disclose items required by law;
- Any party misinterpreted or made a mistake interpreting the terms, or
- One party was coerced into agreeing and signing, that undue influence or intimidation played a part in the signing of the contract.
Mental incapacity and legal age may also make a contract voidable.
How do you distinguish void cases from voidable ones?
Case Example 1 Under the Influence
You reach an agreement with a retail company to sell your fashion brand during a business meeting. The meeting turns into a cocktail hour, and you sign a contract while under the influence of liquor. The contract you signed may be deemed void ab initio because the alcohol rendered you “incapacitated” to sign a legal document.
Case Example 2 Underaged
You reach an agreement with a retail company to sell your brand during a business meeting. At the time of signing a contract, you were a minor. Since you weren’t incapacitated but merely under the age of a majority, the contract is still valid but voidable.
In case example 2, you have a right to get out of your contract with the retail company or you may choose to proceed with the agreement. In either case, consult a lawyer to help you get the best outcome from a legal agreement.
Any transaction involving legal obligations must have proper representation. This way, your rights are protected, and a balanced, fair contract is created from the beginning, making it legally enforceable.
But must a contract contain mind-numbing legalese?
What Makes a Contract Valid?
“Heretofore.” “Notwithstanding.” “Including but not limited to.” Most contracts are written in legalese that does not encourage further reading. Add to the confusing legal jargon are the overzealous use of certain punctuations, like semicolons.
But a contract does not have to be written in complex legal language. It can still be valid even when it’s in plain language.
Everyday English in contracts may even be better since it will likely leave no room for misinterpretation. All parties will feel comfortable knowing they’ve understood the terms and are clear about their obligations.
Big businesses have even applied this concept to their contracts, and one of the best examples is GE’s Aviation’s digital services unit. After reviewing some 11 contracts with 200 pages, the legal team at GE Aviation decided to merge all documents using plain language. They added that if a high school student couldn’t understand the contract, it was not a good document.
Since applying plain language to contracts, the company has experienced negotiations in 60 percent less time.
A valid contract must also contain:
- Offer and acceptance
- Something of value must be exchanged and it must be legal
- All parties must agree to all major terms
In some states, a contract is valid only when it’s written. But California and Massachusetts, oral and verbal agreements may be legal and valid. Much like written contracts, oral contracts must adhere to key elements to make it binding. In Massachusetts, it must not violate the Statute of Frauds. In California, only certain agreements may be made verbally; others must be in writing.
Oral contracts can be tricky to prove. You must have witness testimony to back up claims and receipts, emails or bills to support the terms of the contract.
So before you seal a business deal with a handshake or your word, check with your state’s laws on the validity of oral agreements. In general, always have your agreement in writing when it:
- Takes more than a year to fulfill
- Involves the sale of goods at a high amount, or over what the state allows
- Means agreeing to buying someone’s debt
- Means resolving a deceased person’s debt
- Covers a prenup or postnup
Protect Your Rights
In any legal agreement, never sign over your right to understand and be represented. Contracts have a way of devastating a life and livelihood when it’s written to give more advantage to the other party.
If you’re presented with a document you’re not able to understand, get legal advice. Never be pressured into signing a contract you haven’t read or completely comprehend. When you do not agree with certain terms, go back and negotiate with a lawyer.
Although you have a right to make case for void contracts, sometimes it’s easier to be cautious in the beginning than to go through a legal battle.