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What Makes a Contract Invalid in Florida?

When people think of contracts, they most likely have a vague, general understanding of what one actually is. In reality, a contract is a written agreement between two parties (people, legal entities, etc.) in which one of the parties agrees to perform a good or provide a service for monetary payment or additional goods and services.

Despite this, just because an agreement was settled on with an offer and acceptance, it doesn’t always mean that it is a legally-binding contract. Read on to learn what makes a contract invalid in Florida.

Contract Law

To start, we have to understand the definition of a valid contract. Section 2(h) of the Indian Contract Act, 1872, it states: “All agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.”There are several categories of contracts that must be written in order to be enforceable.

It’s important to be aware of the elements of a valid contract, so you can prevent potential disputes in the future with whoever you create one with, whether it is with a partnership or shareholder. So, what is a valid contract definition? Under common law, there are six elements of a valid contract:

  1. Offer: An offer by one party or entity and a promise to execute the action stated.
  2. Acceptance: The acceptance by another party or entity and acknowledgment of the offer.
  3. Genuine agreement: Together, an offer and acceptance create a final agreement between both parties.
  4. Capacity: Both parties have the legal ability to enter into a contract.
  5. Consideration: A mutual exchange of value between both parties is given in return for performing the action – invalid consideration comes into play when there is acceptance without consideration.
  6. Legality: The contract is in the state of being in accordance with the law.

Written Contracts

Contracts can be legally completed verbally without any written documentation. However, even with written contracts, contractual disputes are still possible at any point of the process. Although U.S. law doesn’t always require for contracts to be in writing to be enforceable, the Statute of Frauds established certain categories of contracts for when written documentation is mandatory. Among these categories include:

  1. Contracts that cannot be performed in under one year.
  2. Contracts involving real estate, including any sales or interest in real estate.
  3. Contracts in regards to home improvement, health care or credit agreements.
  4. Contracts where one party promises to pay off the debt of another.

There are several situations that can make a contract invalid.Invalid Contracts

There are various situations in which a contract can become invalid, void or enforceable. An example of such is a contract that does not follow any of the three requirements needed to be valid, which will cancel or declare them invalid in the name of the law. You want to also take caution against illegal agreements in business law. Other circumstances that can create an invalid contract include:

  1. If the contract involves illegal activity.
  2. If the contract pertains to a mutual mistake.
  3. If the contract was made at gunpoint.
  4. If the contract’s purpose is illegal.
  5. If the consideration, offer or acceptance requires an action that is against the law, such as robbery, distribution of drugs, gambling, etc.
  6. If the contract is against public policy.

Adding to these, a mistake made by only one party does not necessarily void a contract. A contract is also not automatically unenforceable due to one party making a wrong assumption or miscalculation. The presence of fraud being discovered can also make a contract invalid by the party which the fraud was perpetrated against. Knowing how to distinguish between valid, void and illegal contracts will benefit you in the long run.

Now that you know what makes a contract invalid, do not wait to seek help if you are unsure if a contract you have recently dealt with is void or unenforceable. The experienced attorneys at The Berman Law Group are available to help you, fight for your rights and ensure that you get the representation you deserve. Call us today at (800) 375-5555 for a free, no-obligation consultation.