Contract Law
What Makes a Contract Valid?
Certainty of terms
Agreements must be specific, quantifiable and lawful – there must be no question as to what is on offer and what is required. Courts try to keep contracts in action, but this is impossible when a contract is ill-conceived in its fundamentals. A fundamentally flawed contract is declared void. Where a contract is declared void, everything that has changed hands is to be returned.
Uncertainty of terms
The parties' dispute may be resolved by a court identifying what will make the underlying agreement work and imposing this new interpretation on the parties as a matter of law. When this is impossible, such as if the vagueness relates to something fundamental, this is illusory consideration.
Illusory consideration
A contract is void if it is vague, or improperly conceived as to the payment (or equivalent fundamental rights) due to a party, in return for their fundamental obligations. A contract where the payment is indeterminate, or which offers something illegal, or something already owed, or which leaves consideration up to the discretion of one party, is considered to offer illusory consideration and is ruled to be void.