It’s all about the details, especially in legal contracts.
What does it mean in legal terms, when a contract is null and void? To draft a legally binding contract can be a challenging task, and can cause a great deal of discomfort and trouble if declared unenforceable by law. When a contract is declared null and void, it basically means that it is missing some of the key elements that make it legally binding.
Here is a list of the key elements you need to have in mind, to create a legally valid contract:
· Contractual capacity – Minors, mentally challenged, and people under the influence of drugs and alcohol, do not have the power of law to enter into a fully binding legal contract. Therefore, only people of a certain age (in most cases above 18) and of sound mind can enter into contractual obligations.
· Offer and Acceptance – The offer and the acceptance of an offer, are two sides of a contractual coin, if one is missing, you cannot have a contract.
· Legality of contracts – A contract can only be legal if it abides by the rule of law. If some of the terms oppose the existing laws, it can be declared invalid and thus unenforceable.
· Consideration of contracts – This entails the exchange of goods, services, or anything of equal value between the parties of the contract.
· Mutuality of contracts – A contract means that at least two parties have to provide something for the other, for it to be valid. You cannot have a valid contract where only one party has obligations and the other only has a right to something.
The difference between void and voidable contracts
When we say a contract is void it means that it cannot be enforced and cannot be fixed to be legally valid. Basically, these contracts do not have some of the key elements that we mentioned previously.
Voidable contracts, on the other hand, mean that even though some element is missing, they could still be enforced under certain circumstances, especially if both parties of the contract when discovering the missing element, choose to continue with the enforcement.
The main difference is that void contracts are invalid from the very beginning of the engagement but voidable contracts may become invalid at a certain time, maybe at the beginning or if circumstances change later on.
Termination of contracts
· Termination by mutual consent of the parties: the best option to terminate a legally binding contract is when both parties find an amicable solution to terminate it. This entails the signing of a legally binding agreement, which in many ways is a type of contract where the parties agree to release one another from their obligations.
· Convenience: In some cases, the contracts contain a clause that allows the parties to terminate the contract by giving reasonable notice in time and if certain criteria are met.
· Causable termination: When a party fails to perform one or more of its obligations, the other party usually has the right to cancel the contract by giving notice.
The proper way to review contracts
Now that you know the key elements of a contract, and how they can become unenforceable, here is some advice on what to keep in mind to avoid troubles in the future.
Read carefully and thoroughly
It goes without saying that one of the most important things to do before entering into legal obligations with another person or entity is to read the contract entirely and check all the important provisions. These types of documents may be very long and confusing, so having them checked by a person with legal knowledge is not a bad idea.
Make it plain and clear
Every detail of the contract should be easy to understand. Don’t leave any room for misconception and multiple meanings.
If something is not clear, make sure it is
When reading the draft of a contract, you might stumble upon some provisions and terms that you will not fully understand. In such cases, you should make sure to ask for clarification, if you wish to avoid future headaches. You should be comfortable with all the content of the contract before signing.
Put it on paper
Laws typically recognize the validity of oral agreements, but they are much more difficult to enforce and prove their existence. When you have the contract in writing, it is easier to enforce in cases of dispute about some of the terms.
Know your contractual party
You cannot enter into a legal obligation with everyone out there, can you? Well, you can, but it can be a major issue if the other party proves to be untrustworthy and deceiving. This is why you should always make a background check of the person or entity you wish to engage in legal obligations with. Always make sure that as much as possible that the other party can deliver on their promise.
Read it again
Last but not least, it is always a good idea to double-check what you already read. Sometimes a key issue may escape your eye or can be understood differently than intended. So before you put your signature at the bottom of the paper, try to make sure that you understood it completely.