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Will lack of valuable consideration invalidate a work contract?

by | Aug 23, 2021 | Uncategorized

Employment contracts can easily lead to major disputes between workers and the companies that hire them. Employees often sign contracts without considering the long-term repercussions of the terms, and companies may include aggressive or unconscionable terms in their contracts that can damage a worker’s economic future.

Disputes at the time of signing are not common, but disputes when employment ends are much more frequent. A worker may attempt to move on to new employment, only to discover that their former employer intends to enforce a non-compete agreement.

Some people will try to fight back against the enforcement of a work contract, leading to litigation. Can an employee invalidate a contract if they claim they did not receive valuable consideration for their concessions? 

Mutual benefit is crucial when drafting a valid contract

For the courts to view a contract as valid, it needs to meet certain criteria. The parties signing the document should have knowledge about its contents and the free will to make a decision. They should be old enough to sign a contract and without any chemical impairments or medical conditions that diminish their testamentary capacity.

It is also important that all parties receive some kind of valuable consideration. In a non-compete agreement, the employer receives the protection of a former worker not starting their own business or going to work for a competitor. The employee needs to receive something worthwhile for signing away those rights.

Workers often sign employment contracts as part of their initial hiring process. That means that their job offer becomes the valuable consideration. However, a worker signing addendums to their contract when already employed should receive additional benefits. If a worker signed an additional contract or agreement without receiving anything to compensate them, that might invalidate the document and make it unenforceable in court.

What happens with an unenforceable or invalid contract?

When a contract includes terms that a court cannot enforce or when it lacks the basic components that lead to a valid contract, it could affect what happens during a contract dispute. If an employee did not receive adequate information about or compensation for the concessions they made to their employer, the courts may not agree to enforce the contract terms in litigation brought by the employer.

Reviewing your employment contract can help you better decide how to respond to an employer attempting to enforce what you think are unfair terms.