Business Degree Certification Practice Test

A valid contract may be unenforceable for which reason?

1. Failure to satisfy the Statute of Frauds

2. Statute of Limitations has run

3. Both (A) and (B)

4. Valid contracts are always enforceable

The correct answer is: Both (A) and (B)

A valid contract may be unenforceable for a couple of reasons, including the failure to satisfy the Statute of Frauds and the expiration of the Statute of Limitations. The Statute of Frauds requires certain types of contracts, such as those involving the sale of real estate or contracts that cannot be completed within one year, to be in writing to be enforced. If a contract that is otherwise valid does not meet these requirements, it can be rendered unenforceable, even if the parties have agreed on its terms. Additionally, the Statute of Limitations establishes a time frame within which a party must initiate legal proceedings to enforce a contract. Once this period expires, even if the contract was valid at the time it was formed, the ability to enforce it in court is lost. Thus, both the failure to satisfy the Statute of Frauds and the Statute of Limitations running out can result in a valid contract being unenforceable, making the comprehensive choice reflect the nature of how contracts operate within legal frameworks.