Understanding Validity vs. Enforceability in Contracts: Key Differences Explained (Full Transcript)

Speaker 1: Welcome to the KJ Methods YouTube Channel. Don't forget to like, subscribe, and share this video. What I want to talk about today are these two often confused contract terms, validity and enforceability. These two are often confused by students, but they are simply not the same. Let's start at the beginning. If you remember, a contract is an offer and acceptance between two competent parties that is going to set out the legal rights and the promises between the parties in exchange for consideration. Well, what makes a valid contract? In order to have a valid contract, you must have CALL. That's the acronym that we use. C stands for consideration, A stands for assent, and if you remember, we have two different types of assent, mutual assent and genuine assent. L stands for legal capacity, and the other L stands for legal purpose. What we say is, if you have all of these elements, your contract is valid, but if you are missing even one of the elements, then your contract is void. That's pretty simple. You either have the elements or you don't. Your contract is valid or your contract is void. What do we mean then by enforceability? Enforceability is something totally different. Enforceability essentially goes to whether the court can enforce your contract. What we say is, there are certain contracts that you have to do something more. The biggest one we see in the class is the statute of frauds. The statute of frauds says certain contracts must be in writing in order to be enforceable. What kind of contracts? Contracts for the sale of real estate, contracts for personal property over $500, deeds must be in writing, anything conveying an interest in real estate must be in writing, and if you remember, leases over a year must also be in writing. What are we actually saying there? We're saying that these things have to be in writing in order to be enforceable by a court of law. Can you still perform these type of contracts if you don't put them in writing? Sure, you can. The problem is if something goes wrong. The two people, as to themselves, can enter into a contract that they fail to put in writing. Can they perform it? Absolutely, they can perform the contract. Where the problem comes into play is if something happens with this contract, they're not going to be able to go to court with the contract. What I say is, enforceability does not equal validity. Validity does not equal enforceability. In fact, enforceability comes before validity. This is what I mean. If there is a contract that you were supposed to put in writing, and you didn't put it in writing, so you go down to the court, and there's a problem with the sale of a home, the court says, hey, where's the writing? You're like, we didn't put it in writing, and the court says, get out of here. It's unenforceable. Now, did the court make any determination as to the validity of the contract? No. The court never even looked at the contract, doesn't care about the contract, because even if the contract was valid, it is still unenforceable. The importance of a writing goes to enforceability, not to validity. Well, that's it. Short video today. Hopefully, that was helpful to you. Once again, don't forget to like, subscribe, so that you can be informed when we upload a new video and share this with your friends. Thank you for coming to the KJ Methods YouTube channel.