If A Contract Creates No Legally Enforceable Rights, Is It A Contract?

The word "contract" is derived from the Latin word contrahere which means to draw (or drag) together.   The California Civil Code defines a "contract" as "an agreement to do or not to do a certain thing".  Cal. Civ. Code § 1549.  The estimable Bernard E. Witkin, however, took a broader view:

[t]he word "contract" is often used with different meanings, e.g., as a synonym for "agreement" or "bargain."   It may refer to legally ineffective agreements, or wholly executed transactions; to acts of parties, to a document that evidences
them, or to resulting legal relations.”

1 Witkin, Summary of Cal. Law (11th ed., May 2023) Contracts, § 1, italics added.)

A recent California Court of Appeal decision considered whether a confidentiality clause in an agreement that explicitly stated that the entire agreement was unenforceable was enforceable.  Mueller v. Mueller, 2024 WL 2809599.  If the court did not enforce the clause, the clause would be a nullity.  However, to enforce the clause would render the unenforceability provision of the agreement.  The Court of Appeal found that the two provisions are harmonized if, as the agreement directed, the confidentiality clause is construed consistently with the overarching provision that the parties intend to abide by the agreement’s terms although they are not legally binding.  

As the case name suggests, the case involved a divorce proceeding and what is known as a "collaborative law agreement".  In California collaborative law is a non-judicial alternative dispute resolution process commonly used for marriage dissolutions.  In experience non-binding term sheets and letters of intent typically include an exception for the confidentiality provisions, which are declared to be binding.  The case nonetheless is a good reminder that such carve-outs are necessary if the parties intend to enforce an otherwise unenforceable contract.