What situations can make a contract unenforceable?

On Behalf of | Jul 9, 2021 | Business Law |

Conducting business in New York and many other states involves preparing and signing contracts. With so much time and effort getting put into creating a contract, it makes sense to ensure this document gets prepared correctly. Here are a few situations that would make a contract unenforceable.

Signing under duress

Under normal circumstances, someone signs a contract out of their own free will. However, this isn’t always the case. Unfortunately, some people will try to make another party sign a contract out of duress. An example of this situation would involve using threats to make someone sign a contract they had no intentions of signing, which creates an unenforceable contract.

A lack of capacity

It’s also important for someone to sign a contract when they’re in a suitable mental capacity to do so. When this doesn’t happen, someone is signing a contract under a lack of capacity. Due to their young age, minors couldn’t legally sign a contract. This is also true for someone who is mentally disabled or under the influence of drugs or alcohol.

Illegal contracts

A contract also becomes unenforceable if it’s illegal. This type of contract would involve asking someone to do anything that violates a law. An example of an unenforceable contract would be one requiring someone to sell illegal drugs.

Fraud

One of the most common reasons for business and commercial law disputes involves allegations of fraud. Unfortunately, fraud is also a major problem when it comes to signing contracts. Fraud takes place when someone either lies or hides information about a contract.

To summarize, several factors can make a contract unenforceable. If your business needs assistance exiting a contract, it could be worth your time to contact an attorney.