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When is a business contract unenforceable?

On Behalf of | Jan 21, 2023 | Business Law |

Business contracts are some of the most important tools available to a Connecticut company. These agreements outline the basics of a business relationship between a company and other parties, such as employees, suppliers and others. The necessary terms in a contract depend on the details of the individual situation and the nature of the specific business relationship. Formal agreements are important, especially in the event of a dispute between parties.

When an issue arises, the issue of enforceability is critical. The terms of a contract can come under scrutiny when one or both sides have an issue with the actions of the other party. As you are creating a contract, it is important to be thorough, clear and include terms that will be enforceable in the event of a problem. An unenforceable contract provides no protection or benefit for your business.

Factors that could compromise your contracts

Unfortunately, you may not know that your contracts are unenforceable until there is a problem and the matter goes to court. This is why it is critical to be cautious and careful when creating this type of agreement, working to create a contract that leaves no room for confusion or issues. Some of the conditions that may make a contract unenforceable include the following:

  • There is evidence of undue influence during the creation of the contract.
  • One or both sides did not have time to carefully review the contract before signing.
  • The terms are ambiguous, confusing, unfair or illegal.
  • The contract is missing terms, or it was simply a verbal or informal agreement.

If there is a problem with the terms of a contract or there was an issue when you were creating the contract, a court may determine that some or all of the agreement is invalid. If this happens, it could compromise your financial investment or expose you to additional risks.

Navigating contract concerns

Contract matters can be complex and confusing. It is often beneficial to have experienced guidance as you create a contract, review terms or consider your options in the event of a breach of contract. An unenforceable contract could place the financial well-being of your company at risk, and it is in your interests to be diligent and thoughtful before creating or entering into an agreement. When properly drafted, a contract is one of the most beneficial tools available to you.