Business Law: Chapter 10

Common Illegal Agreements

Gambling Sunday contracts (depends on the state - it varies) Usurious contracts Contract of an unlicensed operator Contracts for the sale of prohibited articles Contracts in Unreasonable Restraints of Trade

Illegal Agreements

A contract must be for a lawful purpose and this purpose must be achieved in a lawful manner. Otherwise the contract is void. However, a contract that is void due to an illegal agreement does not necessarily involve the commission of a crime. If the performance of the act called for in the contract is illegal, the contract is void; or, if the act is legal but the means of carrying it out are illegal, the contract is void.

Gambling Contract

a transaction wherein the parties stand to win or to lose based on pure chance.

Legal Rate

somewhat lower than the contract rate, applies to all situations in which interest may be charged but in which the parties were silent as to the rate.

Usury Law

state laws that limit the rate of interest that may be charged for the use of money. Usury is charging interest in excess of the maximum contract rate.

Maximum Contract Rate

the highest rate that may be charged; any above that is usurious.