An unenforceable contract is a legal contract that a court cannot or will not enforce due to a technical defect. An unenforceable contract is valid, but gives the court system reason to refuse to offer remedy to either party. As there are many different types of contracts, there are many different reasons that a contract may be voidable, such as statute of limitations, omitted provisions, and ambiguity.
In essence, a contract is the exchange of promises for which the law provides remedy in case of breach by one or both parties. An example of a simple contract would be the promise by a homeowner to pay a contractor a specific sum of money to paint interior walls. If the painter finishes painting the walls, the homeowner is then bound to pay for the job as promised.
For a contract to be valid, it must contain certain parts: agreement, consideration, intention to create legal relations, form, capacity, consent, and legality. This means that two or more parties come to an agreement to exchange goods or services in consideration for some type of payment. Each party must enter into the contract for the legal exchange of goods or services, and must intend for their agreement to be binding with legal implications, with both parties being legally capable of understanding and entering into the contract. The contract must be in proper format for the type of contract that is being executed, and all parties must enter into the contract freely.
The unenforceable contract is valid on its face, but may not be enforced by the courts should one of the parties refuse to carry out the terms of the contract. For example, if a contractor paints the homeowner's interior walls as agreed but the homeowner does not pay, the homeowner is in breach of contract. If the contractor fails to seek court action within the statute of limitations, the court will not help either party receive compensation or damages for breach of contract. Even though the contract was valid and enforceable, the expiration of the statute of limitations voids the contract between the parties and no damages can be awarded.
There are many things besides statute of limitations that can make an otherwise valid contract an unenforceable contract. Leaving out provision for foreseeable events can also result in an unenforceable contract. For example, many people do not want to think about the myriad things that could go wrong when entering into a contract. Leaving out provisions for dealing with obstacles, failures, and betrayals can cause a court to deem an agreement an unenforceable contract.
Courts of law will not recognize a contract as enforceable if the contract requires either one or both parties to perform illegal or immoral actions, regardless of how the contract is written. Vagueness can also cause a contract to be declared an unenforceable contract. Ambiguity can do the same, as well.