How to Understand Contracts Part 4

Before taking action in court to enforce a contract or to respond to a plaintiff for you alleged breach of contract, you get a sense as to which of four categories the court will place your contract.

Difficulty: Easy

Instructions

1. Know what makes a valid contract:
   As mentioned before, there must be agreement, consideration and capacity on behalf of the principals entering into the contract to do a lawful act. However it must also be enforceable. As an example, if you buy a sole proprietorship from an individual and he dies, you are not bound to execute his contracts. Any action for his lack of performance must be brought against his estate.

2. Know what makes a contract void.
   After passage of the Volstead Act in 1919 every contract to deliver liquor to any establishment in the United States was voided because the consumption of liquor was suddenly illegal. These existing contracts where suddenly made null and void with Congress’ override of Woodrow Wilson’s veto

3. Distinguish from a voidable contract.
   Minors, insane people, persons acting under duress can void a contract at their option. Again, looking at the example of the will, in addition to adding the phrase of sound mind, most add that this is executed willingly or without duress.

4. 

   Learn What Makes an Unenforceable Contract
   If under the law a contract is supposed to be in writing and it is not, it is considered unenforceable. Here’s one example that can get you into a lot of trouble. You’ve partnered in a business, but your partner wants to embark on a risky venture that you don’t support. To mollify you, she says that she’ll change your status to that of a limited partner. Even though you accept the offer in front of witnesses, the change would be unenforceable, because such a change under law would have to be in writing. When your partner’s bad business decision bears rotten fruit, you would still be liable as a full partner.