The Requirements of a Valid and Enforceable Contract, Part 5—Legality
When Is the Subject Matter of a Contract Illegal?
In earlier blogs, we have looked at four other requirements of a valid and enforceable contract:
- There must be an agreement.
- Both parties must have given consideration.
- The parties must have willingly entered into the contract.
- The parties must have had the legal capacity to enter into the agreement.
The final requirement for a binding contract is that the subject matter of the contract must be legal. A contract that violates federal, state, or local law will be rendered void. Furthermore, a contract that is contrary to public policy is generally unenforceable.
Examples of Contracts That Are Void as Illegal
If a contract cannot be completed without violating an existing local, state, or federal law, it will not be enforced. That includes:
- Contracts involving the illegal manufacturing, distribution, or sale of controlled substances
- Contracts that violate antitrust or deceptive trade practices laws
- A contract to engage in illegal gambling
- Agreements to transport or sell stolen goods
Examples of Agreements Are Void as Contrary to Public Policy
Courts will decline to enforce contracts that they perceive go against the best interests of the public as a whole. Common situations where a contract may be voided as contrary to public policy include:
- Contracts to engage in immoral acts, such as sexual services
- Contracts that encourage or induce corruption of public officials
- Contracts that involve the promise of, or a trade in, public offices
- Contracts that involve trading with declared enemies in a time of war
- Contracts to employ underaged workers
Contact MCIS Law
At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to businesses and business owners throughout southeast Texas, handling all matters related to business formation. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.
