The main reason people execute written contracts is to make an agreement enforceable. Contracts provide a clear point of reference for the terms that parties agreed upon and make it easier for either party to take legal action to enforce the agreement if necessary.
If one party breaches a contract by failing to take certain actions, performing to a lower standard than initially agreed upon or engaging in misconduct, the other party could initiate a lawsuit to enforce the contracts. Occasionally, the California civil courts determine that a contract is unenforceable.
What circumstances might compromise the enforceability of a California contract?
Scenarios involving misconduct
There are multiple types of misconduct that could lead to the creation of unenforceable contracts. The California civil courts typically do not enforce contracts signed under duress. Someone subject to a direct threat cannot legally agree to a binding contract. Similarly, intense coercion can also affect the enforceability of a contract. Finally, intentional fraud on the part of one party could lead to an unenforceable contract due to their misrepresentation of the circumstances. The agreement must also contain terms that benefit both parties. An agreement that solely benefits one party may be an unconscionable contract that the courts refuse to enforce.
Scenarios involving capacity concerns
Not everyone is capable of executing an enforceable contract. Perhaps someone is under the influence of alcohol and therefore incapable of appropriately contemplating the consequences of the agreement. Maybe they have experienced profound cognitive decline as they aged and now lack testamentary capacity. The person who signed the contract might also have mental health challenges that make them incapable of agreeing to an enforceable contract. Raising questions about someone’s state of mind and capacity can potentially lead to the courts determining that a contract is not enforceable.
Scenarios involving illegal provisions
The California courts do not enforce contracts that include terms that violate state or federal statutes. Even if the parties agreed to those terms at the time of contract execution, the courts typically do not enforce contracts that include provisions that violate the law.
Evaluating the enforceability of a contract is important for those navigating a contract dispute as part of a complex delayed or failed business transaction. Those who understand the requirements of an enforceable contract can better recognize when an actionable contract breach occurs.