There are a number of factors to look at in determining if a contract is legally enforceable. This is not meant to be an exhaustive list of all considerations. If a particular contract raises red flags under any of these considerations, contact central office for further guidance.
Lack of capacity If a party to an agreement lacks capacity, the agreement may be voidable. The important consideration in the Medicaid context is whether the person had the mental capacity necessary to enter into the contract. The test is whether the person had the mental capacity to understand the nature, purpose and effect of the transaction.
Fraud or undue influence If a party enters a contract as the result of the other party's fraud, the contract is not enforceable against the innocent party. If the contract is the result of undue influence exercised by someone in a position of power or authority over a vulnerable person, the contract is not enforceable.
Statute of Frauds If the contract is an oral agreement, it has to satisfy the statute of frauds. That means that if the contract is for the sale of land or cannot, by its terms, be performed in less than a year, the contract needs to be in writing (ORS 41.580).
Indefiniteness For a contract to be enforceable, its terms must be sufficiently definite that it is clear that the parties concluded a deal (rather than merely an agreement in principle) and definite enough that a court could fashion a remedy for breach. If the terms are so vague that it could not be enforced, the contract is probably not legally binding.
Mutual mistake If both parties make a contract under a mutual mistake concerning a basic assumption of fact, the contract is likely unenforceable.
Unconscionability This is not likely to come up in the Medicaid context. It usually involves standard contracts with a large entity. The large entity, knowing that the buyer (for example) is likely to sign virtually any sale contract, cannot include unreasonable terms in a large contract.
Illegality If either the consideration or the object of a bargain is illegal, the bargain is treated as an illegal contract. Some contracts are prohibited by statute (contracts in restraint of trade) and some are illegal because they violate public policy (contracts to defraud or injure third parties).