There are quite a few instances when a contract can become unenforceable. Of course, these instances are going to be fact-specific and circumstantial depending on the particularities of your case. One broad category that can result in an unenforceable contract is lack of capacity, this simply means someone is lacking the mental ability or comprehension to enter into an agreement thus rendering it unenforceable. One example of lack of capacity is a person’s age. To enter into a contract, one must be old enough to do so, meaning that if a minor child enters into a contract and is legally not old enough to enter into agreements it could be unenforceable.
Being under the influence of drugs or alcohol can create an unenforceable contract due to lack of capacity. Keep in mind, this doesn’t only apply to intoxication from illegal drugs, it can also be the influence of legal medications or substances that can render you incapacitated.
Incompetence is another capacity issue; this can include dementia, Alzheimer’s, and other diseases. This often occurs when someone who is elderly or on their deathbed starts making major changes to their estate planning, sometimes being influenced by another individual but did not have the requisite mental capacity to make those decisions.
Duress or undue influence can render a contract unenforceable. A requirement of a valid agreement or contract is, both parties have to be under their own free will when entering into said contract and therefore cannot be forced into signing something or enter into an agreement by force or influence – i.e., not under their own free will. Violence or threat of violence would be the obvious example of duress or undue influence. This does not have to be violence towards the person entering into the contract, it could be a threat of harm to a person’s loved ones or children in order to force you to enter into a contract.
Undue influence is a situation where someone in a position of unequal power or influence over someone exerts such in obtaining an agreement or contract from that individual. A manager or boss using their influence over an employee is a classic example of this.
Misrepresentation and fraud could render a contract unenforceable. Fraud is intentional, so in contract law, that’s typically deceiving another party about something material to the agreement. This can be done by lying, merely telling a half-truth, or not telling the whole truth. Misrepresentation is an untrue statement that would induce someone to agree, but it is not always necessarily fraud. The bottom line here is that if a contract is entered through either misrepresentation or fraud, it can be rendered unenforceable depending on the facts.
Illegal contracts or anything that’s a violation of law or public policy that you’ve contracted to do is going to be unenforceable. This could be a contract to sell illegal drugs or narcotics. That’s against the law, therefore the subject of the contract is unlawful and thus void.
Probably, the issue that is going to come up the most is a statute of frauds issue. The Statute of Frauds requires specific categories of contracts to be in writing and signed by the party against whom enforcement is sought. These are contracts for marriage, real property, guarantees, surety-ships, or cannot be performed within one-year. The Statute of Frauds is always going to be a consideration when entering into agreements or analyzing situations after the fact.
Lastly, sometimes certain situations involving mistake can create an unenforceable contract. Ultimately, the big picture with unenforceability of contracts is that it is going to be fact-specific. You’re going to need an attorney to analyze the facts, the situations, and the contract itself to determine if something is unenforceable and then take the next steps.
What Are Some Remedies To A Breach Of Contract?
There are quite a few categories when considering remedies to contractual breaches. These remedies are going to be determined by the type of contract, transaction, or agreement you have. The most typical remedy is a compensatory remedy or, in other words, money damages. Sometimes these are referred to as actual damages. There are general compensatory damages and special compensatory damages. General damages are covering a party’s direct loss when another party’s breach has harmed them. A good example might be you contracted with the party to provide certain services, and they said they would pay you X amount of dollars. You fulfilled your contractual obligations, and the other party is refusing to pay you. The money that you are owed would be your general damages.
Special damages, or sometimes as they’re referred to, consequential damages, are not typically predictable but still a result of the breach of contract. Another way of thinking of these damages is the indirect harm you suffered as a result of the breaching party’s conduct. Typically to recover special damages, the breaching party needed to be aware of the unique circumstances when the contract was entered into. A good example is when a product needs to be delivered by a specific date to one party of a contract, in order for that purchasing party’s conduct business on their end, but as a result of the other party’s breach from delayed delivery, the purchasing party suffers indirect damages. It would be unjust to require the breaching party, if unaware of the specialized circumstances, to owe damages to the other party without some type of notice or awareness by the breaching party in advance of the “special” circumstances.
Another contractual remedy is specific performance. Specific performance is when a party can be forced by a court to perform their duties under a contract. You are going to see this remedy most often in real estate transactions. Real estate is considered inherently unique, and each piece of land and property is deemed to be original. Therefore, if a party unjustly tries not to sell or buy a particular piece of property, a court can step in and require specific performance. However, there is the opposite effect when contracts are for labor. It is unconstitutional to force someone to provide labor or services. If a party is contracted to provide labor and refuses to do so, you cannot get specific performance because the law cannot force someone to do labor and therefore your relief would be limited to other remedies. In this situation, you are likely going to be looking for an injunction or monetary damages. This issue comes up in the entertainment industry a lot. If an actor or actress might be considered a unique talent and you’ve hired that specific person to provide their services and they refuse to fulfill their obligations in the contract, the court can’t put them in handcuffs and make them come to the set to perform. Instead the damaged party could move for an injunction prohibiting their performance/services for a third party.
An alternative remedy to breach of contract is rescission. This is essentially canceling the contract, terminating both parties’ contractual duties. Similar to recission is the remedy of reformation, which is when a court changes the contract’s substance to correct or alter for one party, in the form of equitable relief. It is important to note, courts typically do not like to interfere with mistakes that could have been avoided by a party from conducting pre-investigation prior to entering into a contract. A good rule of thumb is, if you could have discovered something through due diligence prior to finalizing a contract, the legal system should not necessarily step in to save you from your lack of due diligence or mistake.
Another great example of this concept comes up with transactions for property. Zoning issues often arise when dealing with property. Often, individuals or corporations will purchase property intending to start business ventures, unaware that the property was not properly zoned for the type of business to be conducted. If you bought property thinking you could utilize it in a certain manner but never conducted your due diligence, then after the fact attempted to rescind a purchase contract, the court will not step in and correct the contract because you could have avoided your mistake by conducting due diligence in the first place.
A final remedy when dealing with breach of contract is restitution. Restitution puts the parties back where they were or, more importantly, the injured party back to their position before the contract, like it never happened. A good point here is if you are going after restitution damages, you can typically not recover lost profits or earnings under this method of recovery because the relief you are seeking is to ignore the contract and place you back in your original position pre-contract.
For more information on Contract Law In Florida, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (904) 831-1030 today.
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