Just because you’ve written a contract doesn’t always mean it’s legally enforceable. Even if you meet all of the requirements to form a valid contract, you may find that your contract is void. If that happens, you don’t actually have a contract at all.
TL;DR (Too Long; Didn't Read)
Contracts are void if they pertain to illegal activity, restrain certain activities, are patently unfair, require an impossibility to complete or were executed by one or more persons who were not competent to do so.
Elements of a Valid Contract
Void contract cases are not uncommon, so it’s important to create a legally enforceable contract. A contract must have several elements to be legally enforceable:
- An offer: one of the parties to a contract must make a promise to do or not do something, usually by a specified date (for example, to paint your house by a certain date)
- Acceptance: the other party to the contract accepts the offer through words or actions
- Consideration: something of value is promised in exchange for what is being offered, such as money, promising to provide a service or an agreement to not do something (for example, to paint your house in exchange for money)
- Mutuality: both parties understand and agree to the terms of the contract
Contracts can be written or oral (although certain types of contracts must be in writing, such as contracts for the sale of real estate), but they must contain those four elements. If they are missing any or all, they will likely be found void.
Void Versus Voidable Contracts
Despite having all of the elements of a valid contract, contracts can either be void or voidable. Void contract cases pertain to contracts that cannot be enforced by either party, even if they both agreed to it. A void contract is a contract that doesn’t legally exist because of an external factor, such as a contract regarding something impossible or illegal.
A voidable contract, however, is valid and enforceable, but can be canceled by one party before it is carried out. Contracts are voidable if one of the parties who entered into it was a minor, was tricked or forced into entering it or was incapacitated at the time the contract was entered into. If, for example, someone was intoxicated when entering into the contract, he can void the contract when he realizes his mistake, so long as he didn’t carry out any terms of the contract. Another voidable contract is one that is unfair or unjust, such as when one party entered into the contract under duress or threat of violence, or when one party has taken advantage of the other when creating the contract, either by inserting confusing contract terms, limiting her liability for breach of contract or creating a very one-sided contract.
While some instances of a void or voidable contract are obvious, others are more subtle and may require court intervention to help determine if the contract is legally enforceable or not.
Examples of Void Contracts
When a contract is void, it cannot be altered or amended. Instead, the contract is typically canceled completely by the court interpreting the contract. There are several circumstances in which a contract will be found void (as distinguished from voidable). One void contract example is a contract that involves illegal behaviors, such as criminal activity or gambling. If you enter into a contract to kill another person, that is a void contract, because you cannot contract to do something illegal. Another example of a void contract is one that is entered into by a person suffering from a mental illness that renders her mentally incompetent.
If the contract is impossible to perform, it can also be found void. An example of a void contract that is impossible to perform is one in which the initial elements of the contract no longer exist. For instance, if the contract is to paint a house and the house burns down in a fire, it is impossible to perform and any contract is void.
Contracts that hinder a person’s rights or actions are also void. A contract that interferes with someone’s right to travel is a void contract, for example.