Is Your Contract Enforceable? Common Issues That Can Invalidate an Agreement
Author: Lindsay A. Compton
Date: January 7, 2026
Contracts are meant to create certainty. Certainty in each parties’ responsibilities and obligation to each other. Certainty that promises will be enforced. Certainty of where the risks are allocated. Certainty that disputes can be resolved by the agreed-upon terms rather.
When properly drafted and executed, they allow parties to rely on promises and plan accordingly. But not every signed agreement is enforceable. Courts routinely refuse to enforce contracts that violate basic legal principles.
Understanding common enforceability issues can help individuals and businesses avoid costly disputes before they arise.
1. Contracts That Violate a Statute
A contract must comply with applicable statutes, which are laws enacted by the legislature. If an agreement violates a statute, it may be void or unenforceable. Some laws prohibit certain types of contracts altogether or require specific terms, disclosures, or formalities. For example, statutes may require certain contracts to be in writing, to be notarized and witnessed, limit interest rates, regulate licensing, or restrict non-compete agreements.
How to prevent problems:
Confirm that the subject matter of the contract is lawful;
Ensure required formalities (such as written agreements or signatures) are met;
Contact an attorney to confirm statutory compliance; and/or
Stay current on statutory requirements affecting your industry.
2. Contracts That Violate Public Policy
Even if a contract does not directly violate a statute, it may still be unenforceable if it violates public policy. Public policy reflects society’s interest in discouraging harmful or illegal conduct. Courts will not enforce agreements that undermine those interests. A contract to perform an illegal act—such as falsifying records or evading taxes—is unenforceable, even if both parties agreed to it. A contract to perform an illegal act is not the only tie a contract would be against public policy. For example, an employer requires an employee to sign an agreement stating that the employee may never report workplace safety concerns or discrimination to any government agency, even after the employment relationship ends.
How to prevent problems:
Avoid contract terms that encourage illegal, unethical, or harmful behavior;
Ensure agreements promote lawful business objectives; and
Review contracts with counsel when provisions push legal boundaries.
3. Unconscionable Contracts
A contract may be unenforceable if it is unconscionable, meaning it is so unfair that it shocks the conscience. Unconscionability often involves both procedural and substantive unconscionability. Procedural unconscionability considers unequal bargaining power and lack of meaningful choice, while substantive unconscionability considers extremely one-sided or oppressive terms. To illustrate, a rental agreement might charge $200 per day for a $50 late rent payment, or a payday loan might charge triple-digit interest rates with severe penalties for minor delays. Such a predatory late-fee or penalty clause imposes excessive fees or interest rates that far exceed the actual cost or harm caused by a late payment and is likely unenforceable as unconscionable.
How to prevent problems:
Use clear, understandable language;
Avoid hidden or surprise terms;
Ensure the agreement is reasonably balanced; and
Give parties a meaningful opportunity to review and ask questions.
4. Mistake
A contract may be unenforceable if it was formed based on a mistake. Mistakes can be mutual, both parties misunderstood a key fact. If both parties agree to sell a specific piece of property that no longer exists, the contract may fail due to mutual mistake. In some cases, mistakes can unilateral, one party made a serious error the other knew or should have known about. For instance, a supplier emails a written quote to a customer offering to sell 1,000 units of a product for $10 total, when the supplier intended to quote $10 per unit. The customer, knowing that the price is far below market value and recognizing it as an obvious error, immediately accepts the offer.
How to prevent problems:
Clearly define key terms and subject matter;
Verify critical facts before signing; and
Address potential errors through contract provisions that allocate risk.
5. Waiver
Even a valid and enforceable contract can become difficult to enforce due to waiver. A waiver occurs when a party knowingly and voluntarily gives up a contractual right. A party can knowingly and voluntarily give up a contractual right through words and conduct. For example, consistently accepting late payments without objection may waive the right to enforce strict payment deadlines later.
How to prevent problems:
Enforce contract terms consistently;
Use written notices when rights are not being enforced; and
Include non-waiver clauses and follow them in practice.
Why Enforceability Matters
An unenforceable contract can leave parties without meaningful legal remedies. Time, money, and expectations may be lost because a key legal requirement was overlooked at the outset. Thoughtful drafting and proactive legal review can help ensure that an agreement accomplishes its intended purpose.
Contact Compton Law, P.A.
Whether you are drafting a new contract, reviewing an existing agreement, or facing a contract dispute, experienced legal guidance can help protect your interests. Compton Law, P.A. advises individuals and businesses on contract formation, enforceability, and litigation. Contact Compton Law, P.A. to discuss your contract concerns and obtain advice tailored to your situation.
