Although a contract is legally binding, both parties don’t always uphold their end of the bargain. Not only can circumstances change, but the terms of the agreement may not be fair or legal in the first place. These issues can lead a judge to decide not to enforce a contract.
Before Signing the Contract
In some cases, a contract becomes unenforceable before it’s even signed. If dubious circumstances surround the contract’s signing, you may be out of luck getting what the other party promised you on paper.
Contracts are unenforceable when at least one party is forced to sign it. Someone may fear losing their life or livelihood if they refuse to agree to specific terms. Another party may exert undue influence if they know the other is vulnerable to high-pressure tactics.
No one should be blackmailed or coerced into an agreement, as this does not give them the time or space to make a rational decision.
Lack of Capacity
All parties must fully understand the terms of the agreement and its implications. Minors, those with cognitive disabilities, and people under the influence of drugs or alcohol may lack the practical reasoning skills required to sign a binding contract. In these cases, a judge may not enforce the agreement.
Misleading or withholding information from another party to make it more likely that they will agree to contract terms is fraudulent behavior. Every party involved needs to know what they agreed to for the contract to be enforceable.
The Terms of the Contract
Even if both parties were calm, capable, and truthful when you signed the contract, the terms of the agreement must be legally enforceable. In some cases, courts may refuse to enforce a contract due to what is being asked of one or both entities.
A judge’s job is to uphold the law. No court will encourage a person or business to do something against the law. If the terms of the agreement are illegal or fulfilling them would be a detriment to society, the contract becomes unenforceable.
Sometimes one party holds significantly greater power than the other or sets grossly unfair and unreasonable terms for the contract. In these cases, the court may not throw out the entire agreement. Instead, they may set different terms or enforce only the parts that are fair to both parties.
Unilateral or mutual mistakes can be materially detrimental to one or both parties. Suppose the contract language contains a mistake that negatively impacts an involved person or business (such as forgetting a zero on a payment amount). In that case, a judge may choose not to enforce the contract.
After You Sign the Contract
Things may change unexpectedly after you or the other party signs a contract. The following sections explain which unexpected issues may render a contract unenforceable even after the ink dries on the dotted line.
Soaring inflation, business dissolution, and unforeseen weather events can make fulfilling a contract impossible. In these cases, a judge can elect not to enforce the contract because there’s no way the other party can satisfy their obligation.
Laws change often, and sometimes a once-legal activity becomes illegal after a contract is signed. Your contract may become unenforceable if laws no longer permit a party to proceed with the agreement.
Skilled Assistance Every Step of the Way
Just because you signed a contract in good faith does not mean it will always be enforceable. Before entering a costly dispute, knowing what to expect in your case and where you may run into issues is essential.
Touch base with a New York City commercial litigation attorney at Levy & Goldenberg and allow our legal team to review your contract and help you move toward the most beneficial solution for your case.