You Have A Contract! Or Do You? Voidable Contracts By Bob Miles At Isnare.com Ezine Articles

You have a contract, right? Well, maybe. But then again, maybe not. There are several ways to have a contract declared void (as if it never existed in the first place) or voidable (declared void at the option of the aggrieved party). These loopholes include (but are certainly not limited to), lack of legal intention, lack of legal capacity (a child, for example), lack of true consent (fraud, duress, etc.), and illegal object of the contract (a contract for prostitution, for example).

Lack of legal intention: This means that a contracting party makes a promise without intending to be legally bound by it, as in the case of simply making a statement of intention. Legal intention is judged not on the party’s subjective state of mind, but upon that party’s acts – did the other person reasonably believe that the party intended to be legally bound. That’s why you can’t sue your sweetheart for standing you up for the Hawaii cruise - even though she swore she’d be there.

Lack of legal capacity: “Infants” (minors under 18 years old) normally do not have the legal capacity to enter a contract. Legally insane persons, some retarded persons, and sometimes even drunk persons lack legal capacity. They can enter into a contract, but watch out – they have the right to void the contract if they want to. The most common way this plays out is where a contract is signed in the name of a corporation that doesn’t actually exist, usually due to some defect in its legal formation (note that if fraud was involved, this defense to contract formation might not be available).

Lack of true – consent True consent is not present if a party secures promise from the other party by misrepresentation, fraud, or duress (a gun to the head, for example).

Illegal object – The object of the contract must be legal – you cannot contract to perform illegal acts, so forget about suing your hit man after you paid him the money and he failed to off your wife. Likewise contracts for prostitution (whether written or oral) or gambling (in jurisdictions where this is illegal) are not enforceable.

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