Types of Contracts Based on Validity: Valid, Void, Voidable and Unenforceable Contracts
If a contract has covered all of the required elements, it is valid and enforceable in a court of law. Example: A homeowner (who is over the age of 18 and sound mind) signed a contract with the store to buy a refrigerator. The homeowner pays for the refrigerator, and the appliance store presents the refrigerator for the homeowner to take home.
Void Contracts -
A void contract is not considered as a contract and has no effect in a court of law and cannot be enforced in a court of law. Most commonly, a void contract will be missing out one or all of the essential elements needed for a valid contract. Neither party needs to take action to terminate it, since it was never a contract, to begin with. Example: An agreement between an illegal drug dealer and an illegal drug supplier to purchase a specified amount of drugs for a specified amount. Either one of the parties could void the contract since there is no lawful objective and hence missing one of the elements of a valid contract.
Voidable Contracts -
A voidable contract is a contract which may appear to be valid and has all of the necessary elements to be enforceable under the act, but has some flaws which could cause one or both of the parties to void the contract. The contract is legally binding but could become void. If there is an injured party involved, the injured party or the defrauded must take action; otherwise, the contract is considered valid. Example: A contract entered into with a minor (under 18 years) could be voidable.
Unenforceable Contracts -
An unenforceable contract is a contract which cannot be enforced in a court of law. This could happen because the terms of the contract are ambiguous (unclear), if one party has a voidable contract or if the Statute of Limitations has expired. Example: Clint bought a property from Harry through a written contract for sale. Seven years after the purchase, Harry wanted to claim that the contract was unenforceable. The statute of limitations for written contracts in Oregon is six years, and Harry would not be able to challenge the contract.
What is Undue Influence?
Undue influence occurs when an individual can persuade another's decisions due to the relationship between the two parties. Often, one of the parties is in a position of power over the other due to elevated status, higher education, or emotional ties. The more powerful individual uses this advantage to coerce the other individual into making decisions that might not be in their long-term best interest.