What happens if the person of the second 'not allowed' contract sues me for breach of contract? Or if the person of the first contract sues me? Is the second contract nullified? Is the term of the first contract not allowing the second nullified?
If I enter into a contract that a previous contract I entered into says cannot be entered, what happens next?
Your question is unclear on whether both contracts are entered by the same parties. Generally speaking, it is valid for parties A and B to enter both contracts unless the formation of the subsequent contract contravenes the rights of another entity who also is a party to the initial contract.
If the initial contract only binds A and B, a subsequent contract between A and B is tantamount to mutually agreeing to modify the initial contract.
If the initial contract between A and B prohibits entering a contract with C, A's formation of a contract with C constitutes A's breach of the initial contract. The specifics of both contracts and the circumstances would help determining
- whether the subsequent contract is void and null;
- whether it is valid at law or in equity for A to have indulged in forming a contract with C (for instance, if B breached the initial contract in a way that frustrates its purpose); or
- whether compelled performance of the [initial] contract between A and B results in A breaching his contract with C (or in the alternative, whether rescission of the subsequent contract is permissible).
If both B and C an "innocent" parties, the court supposedly would look for a solution that preserved their rights to the extent possible, leaving A to carry the cost.