Contract May Be Nullified Under Various Conditions

Some contracts are hardly worth the paper on which they are printed. For one legitimate reason or another, they are null and void or can be canceled by one of the parties without any serious risk of legal consequences.

Here are some of the basics about how you can get in--or get out of--a contract.

The parties to a contract must have the legal capacity to form one. That usually excludes minors and the mentally incompetent. Minors, those under age 18, can disaffirm most contracts, except certain ones for such necessities as food and clothing, or ones that have been approved by a court (a common practice for child actors). That means if you contract for a significant deal with a 17-year-old, you’re probably out of luck if the teen-ager changes his or her mind.

Mental Illness

Contracts with a mentally ill person may also be of little value. A person “entirely without understanding has no power to make a contract,” according to the state Civil Code, which means that a contract entered into by an insane or incompetent person is void.

Intoxication is even a defense to a breach of contract lawsuit. A contract made by a person who is so drunk he does not know what he is doing is voidable if the other party has reason to know of the intoxication.

So before you sign on the dotted line, know who you’re dealing with on the other side.

There are a host of other legal justifications for canceling or rescinding a contract. If the consent to a contract is not freely given, but is given under duress, menace, fraud, undue influence or mistake, it can be canceled. (Each of these concepts has a complex legal definition, so don’t assume they apply to your circumstances until you have consulted a lawyer.)

You may also rescind a contract if “the public interest will be prejudiced by permitting the contract to stand.” In the rare cases when a court finds that the contract is contrary to public policy, then it can refuse to enforce it. For example, an agreement that promotes divorce is invalid. And one that limits liability for an intentional wrong or gross negligence is also usually unenforceable.

You also won’t be able to have a contract enforced if its object is not lawful. For example, if you contract with a bookie to bet on a football game--an illegal act--and you lose, the bookie won’t be able to successfully sue you if you refuse to pay, even if you signed a clearly written contract containing your promise to pay. But the bookie may have other means to persuade you.

Some Contracts Regulated

State laws strictly regulate certain specified consumer contracts, such as those for home improvements, health club memberships and dance lessons.

And finally, there is something called the doctrine of unconscionability, which allows a court to refuse to enforce certain unreasonable contracts. If a court finds that one party had an absence of meaningful choice and that the contract is unreasonably favorable to the other party, it may be unconscionable. The contract has to be oppressive, arise from unequal bargaining power, and often include terms that were unknown or hidden from obvious view.

The best way to avoid any of these problems is to know and trust the folks you are dealing with, understand what you are getting and be sure that the contract actually says what someone tells you it says. (That means you should read it carefully!)