What makes a contract defective

Knowing what makes a contract invalid will help you avoid common mistakes when drafting an agreement. When presented with one in the future, you will be able to tell right away whether the contract is legal or not, thus sparing yourself from unintentional involvement in any illegal activity. A void contract is not valid and, thus, is not enforceable under the law.

Undue influence is a bit subtler and more centered around a power dynamic. If one party is in a special relationship with the other that impacts their ability to decide to sign the contract willingly, the agreement is unenforceable.

For example, contracts between employer and employee, or caregiver and patient, could be more susceptible to undue influence. Misrepresentation Misrepresentation occurs when one party knowingly this is considered fraudulent or unknowingly this is considered negligent makes an untrue statement with the intent to induce the other party to sign the contract.

For example, Company A falsely tells a vendor they will not hire a competing business if they sign the contract. Meanwhile, Company A has a meeting with a competitor the next day and intends to enter into business with them.

Company A would have committed fraudulent misrepresentation, which renders the contract unenforceable. Remember: Always include all terms of the contract in writing. When looking for an example of an unenforceable contract, you will find countless agreements with issues surrounding the terms themselves.

It is essential to thoroughly read and review all terms within a contract before signing. Here are some potential pitfalls that signify the contract may not be enforceable. Some events can make the terms of a contract impossible to complete, thus making the agreement unenforceable. A natural disaster causes the fish population to decline greatly. There are several important factors to consider before, during, and after the signing of a contract to safeguard its enforceability. Make sure to research and always have a contract management plan in action to ensure every agreement you make is in the best interest of your company or client.

This site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Learn more about what we do with these cookies in our privacy policy. What is an Unenforceable Contract?

A voidable contract occurs when one of the involved parties would not have agreed to the contract originally if they had known the true nature of all of the elements of the contract prior to original acceptance.

With the presentation of new knowledge, the aforementioned party has the opportunity to reject the contract after the fact. Alternatively, a contract is voidable when one or both parties were not legally capable of entering into the agreement—for example, when one party is a minor.

In contrast, a void contract is inherently unenforceable. A contract that is deemed voidable can be corrected through the process of ratification. Contract ratification requires all involved parties to agree to new terms that effectively remove the initial point of contention that was present in the original contract. If it was later discovered that one of the parties was not capable of entering into a legally enforceable contract when the original was approved, for example, that party can choose to ratify the contract when they are deemed legally capable.

A contract may be ruled null and void should the terms require one or both parties to participate in an illegal act, or if one party becomes incapable of meeting the contract terms. Certain smartphone apps, categorized as freemium apps, begin as free downloads but later allow for in-app purchases costing real money.

Freemium apps geared toward children may result in a minor accepting the terms and conditions associated with gameplay, though these terms may allow for the later solicitation of in-app purchases. This type of activity led to a lawsuit against Apple AAPL in , which suggested the transactions were part of a voidable contract.

The lawsuit sought to render all Vivint's prior contracts with homeowners as voidable if affected customers wanted to cancel them. But that was not included in a settlement agreement between the New Mexico attorney general and Vivint in May United States District Court, N. California, San Jose Division. New Mexico Attorney General's Office. Financial Fraud. Real Estate Investing. Business Essentials. Actively scan device characteristics for identification.

Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads.