To form a contract, two parties need to agree to exchange one thing for something else. When an exchange has been made, the contract binds the two parties. Almost anyone can be a party to a legal contract; however, the law protects certain people from being bound by contracts that they may not have had the choice to turn down initially.
To determine when a contract may be void, a person needs to know the difference between a void contract and a voidable contract. Generally, any contract entered into by a mentally-impaired person or a minor would be deemed voidable. If a court has declared a person incompetent or a person has been placed under the guardianship of another person, contracts that person enters into would be voidable.
An example of an illegal contract would be a murder-for-hire. Assume that a famous athlete pays a hitman to kill his wife. The athlete pays the hitman $1 million in advance, but the hitman never kills the athlete’s wife. The athlete cannot sue or take the hitman to court for not performing under the contract. No court would enforce this contract, and the athlete would have to be out of his mind to bring such a case against the hitman.
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When a person has entered into a contract that would be declared void, that contract was not legally entered into. A voidable contract would be legal but would be invalidated by law. Void contracts are illegal from the outset. Generally, courts will not enforce illegal contracts. Illegal contracts include contracts that may be criminal, tortious, or otherwise opposed to public policy in their formation or performance.
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An unconscionable contract would be void. This contract is one that no man in his right mind would enter on one hand, and one that no honest and fair man would accept on the other. A contract into which one party was induced by another party with the accepting party having no choice but to accept the agreement, as offered, would be considered unconscionable. For example, two men find themselves trapped in a solitary place for weeks. One man has food and water. The other, a rich man, has no sustenance. In order to live, the rich man needs to eat. The other man takes advantage of the rich man’s situation and sells food and water to the man at $5,000 per day, to be paid at a later date. Courts, generally, will not enforce this type of one-sided contract.
A contract formed against public policy will not be legally enforced. Take, for example, a couple who employs a surrogate mother to carry a baby because the wife cannot conceive. The couple supplies the sperm and all the medical needs of the surrogate mother. The surrogate mother decides she does not want to give the baby to the couple, and she will be supported in her decision by law. A parent cannot contract away her parental rights.