buss law chapter 10
gambling
on the other hand, is an illegal activity simply because the law does not sanction it. For example, going to a casino and winning money is legal and would be considered gaming; however, organizing a poker game at your home and arranging to make a profit for yourself on each hand would be considered gambling.
In pari delicto
persons equally at fault or equally guilty if both parties know the agreement is illegal; in such a case, both parties are in pari delicto
ilegal contracts
A- Violation of statue B- Against Public policy
Contracts That Violate Usury Statutes: Many states have laws that limit the interest a lender can charge
-Interest: is the compensation or fee that a borrower pays to a lender for the use of money. -fee paid by borrower to lender for the use of money; also, legal right to use of or claim on real property -Usury: f the interest rate charged by the lender exceeds the legal rate allowed by state law, the lender has committed usury. -Usurious agreements are illegal -Usury statutes apply only to loans of money, not to sales of merchandise on credit
Partially Illegal Contracts
A contract may be partially legal and partially illegal. f the contract is so complicated that it is not possible to separate the illegal part, the entire contract is void and unenforceable.
5- Contracts that unreasonably restain trade
A covenant in restraint of trade is an agreement whereby one party agrees to restrict (Un pacto de restricción del comercio es un acuerdo por el cual una parte acuerda restringir) -a promise not to compete Covenants are valid if they are reasonable; however, covenants that are too restrictive are illegal, void, and therefore, unenforceable. The common law is inclined against agreements that prohibit or restrain a person from earning a living.
6- Contracts That Create a Monopoly or Limit Competition
A monopoly occurs when one person or business controls all or nearly all the trade or supply of a particular item within an area to the exclusion of all competition. An agreement to create or maintain a monopoly is not only opposed to public policy, but it is also a violation of federal and state laws. These laws, Only when a business deliberately and unreasonably seeks to eliminate competition is it illegal.
Contracts That Oppose Public Policy
Agreements in this category include those that disclaim liability for negligence, interfere with the administration of justice, interfere with the performance of a public duty, harm family life, unreasonably restrain competition and trade, create a monopoly or limit competition, or are unconscionable.
2- Contracts That Interfere with the Administration of Justice
Agreements that tend to interfere with the proper administration of justice—that prevent the law from being applied fairly—are illegal ex: pay a juror to vote a certain way. pay a witness to give false testimony or to conceal evidence during a court trial, an agreement to pay a juror to vote a certain way in a trial,
3- Contracts That Interfere with the Performance of a Public Duty
Agreements that tend to prevent the proper performance of duties by public officials are opposed to public policy and therefore illegal An agreement to bribe a judge, a police officer, or the district attorney in return for a favor is illegal.
Contracts That Oppose Public Policy
An agreement, or a clause in an agreement, opposed to public policy may be illegal even though there is no specific state statute prohibiting its performance under the terms of the agreement. Such agreements are considered illegal and void in most states, however, because they are opposed to public policy and would negatively impact society. it most often applies to contracts that are injurious to peace, health, good order, or established morals of society (a public sense of what is right and wrong).
At this point we should distinguish between gaming and gambling
Both refer to agreements in which one party wins and another party loses purely by chance, even though skill (in most cases) is involved.
continuation Contract of adhesion
Contract containing clauses with unfavorable terms supporting a party seen as holding a superior bargaining position Examples of those in superior bargaining position include apartment owners, banks, leasing companies, and car dealers.
Court Treatment of Unreasonable Noncompete Clauses
Courts generally do not favor noncompetition agreements because, as mentioned earlier, they prevent a person from working and earning a living. Consequently, many states either prohibit or heavily regulate these clauses.
Exculpatory clause example
Karen leased an apartment from Todd in a rundown neighborhood. Shortly after signing the lease and moving in, Karen fell down a flight of stairs in an unlit stairwell when an unrepaired step collapsed. She was severely injured. When Karen brought a suit for injuries suffered, Todd's lawyer introduced into evidence a clause in fine print in Karen's lease that stated: "The tenant agrees to hold the owner of the premises harmless from any claims for injuries no matter how caused." Despite this clause, Todd is still liable because the exculpatory clause in the lease is unenforceable: It is a violation of public policy.
example
McGrail was studying to become a licensed electrician. It was illegal in his state to perform services for the public without a license. Nevertheless, he purchased and then installed some light fixtures for a neighbor. Even though McGrail could not collect for the cost of his labor in installing the light fixtures because he was not properly licensed, he could collect for the cost of the light fixtures. A public garage's disclaimer of liability for a car lost or stolen because of the garage owner's negligence is likely to be unenforceable. TRUE
Those who gamble illegally may be classified as recreational or professional gamblers.
Recreational gamblers participate in a gaming event socially and for pleasure. Professional gamblers engage in gambling activities as a business or profession, hoping to make a profit
Example
Some states do not allow recreational gambling and may even consider participation in such an activity a misdemeanor. States that do allow recreational gambling may place a limit on what a player may win or lose. Bingo is considered gaming, but it could become gambling if a bingo party is arranged without getting a license in states where a license is required.
Contracts that violate sunday statues
Sunday Laws:or blue laws as they are sometimes called, govern the types of transactions that can be performed on Sundays. The most common statute declares an agreement illegal and void if it is made on a Sunday or is to be performed on a Sunday. Some courts hold that parties to an agreement made on a Sunday may ratify it on a regular business day.
B- employment agreements
Territory and time restrictions imposed by the purchaser of a business may also be imposed by an employer upon an employee who leaves his or her present job to work for a competing business. to sign noncompete agreements preventing these workers from either setting up a similar business or working for a competitor who provides the same services as the old employer. Generally speaking, agreements with noncompete clauses are interpreted according to the rule of reason, which means that they must be reasonable in terms of time period, geography, and what the person can and cannot do
Contract of adhesion example
The Randy White automobile dealership agrees to repair the transmission of a car brought into the dealership by Seager, one of its regular customers. The dealership, however, placed a clause on the work order (contract) in fine print that the dealer "will not be liable for any mistakes it may make during the repairs." This clause is unenforceable, especially because the dealership is in a superior bargaining position. However, it will be liable if, because of negligence on the part of the mechanic doing the repairs, the transmission is not properly repaired.
Key points
The law imposes a requirement that the purpose of the agreement be legal. Agreements that are completely illegal are usually void and unenforceable. Some agreements are entirely illegal; others may only contain illegal clauses. The courts will not assist parties to a contract that is illegal by enforcing the contract or permitting recovery of benefits conferred under it. There are exceptions to the rule that courts will not enforce illegal agreements. One exception occurs when both parties are not equally at fault. A court may in this case come to the aid of the party who was unaware of the facts that made the agreement illegal. An agreement may be illegal either because it is forbidden by state statute or because it is opposed to a state's public policy. An agreement may be partially legal and partially illegal. If it can be separated from the part that is illegal, the legal part of the agreement may be enforced where severance would not distort the remainder, substantially change the contract, or deprive one party of substantially the whole or main consideration under the original contract.
4- Contracts That Harm Family Life
Therefore, agreements that place unreasonable restraints or tend to discourage marriage completely are generally illegal. For example, agreements are illegal if one party promises never to marry, promises not to marry for an unreasonable amount of time, or promises not to marry a certain person. an agreement that places a reasonable restriction on marriage is legally binding.For example, the courts have held that an agreement to postpone marriage until reaching the age of majority is legal. This postponement is considered legal detriment.
Contracts That Are Unconscionable
Unconscionable agreements violate public policy. contract so unfair or one-sided that it will not be enforced is one that is entered into under the following circumstances: (1) A party lacks the knowledge and/or understanding of the terms of the agreement or (2) the agreement is too grossly unfair or harsh.
Except: A- Purchaser of a Business
When a person buys a business such as a recording studio, a tool and dye business, or a computer sales and service center, that person is also buying the seller's goodwill, the continued patronage of old and loyal customers. No one would want a business if the seller could open a similar business nearby and draw away the old customers. The purchaser needs some assurance that customers will continue to trade at the old store. Consequently, it is customary to include n the purchase agreement a clause that prevents the seller from competing in the same business within a certain territory for a certain period of time. This clause is referred to as a covenant not to compete (also known as a noncompete agreement) "Restrictive conveniant" Must be reasonable as to time of territory. A territory restriction should not go beyond the trade area of the business. A time restriction should not be longer than is reasonably necessary for the purchaser to obtain the goodwill of previous customers and attract new customers.
Contracts That Violate Licensing Statutes
an agreement made with an unlicensed person is illegal. The person performing the unlicensed act has also committed a crime punishable by a fine, imprisonment or both. Some licensing statutes are merely intended to obtain revenue for the state or local government
Contracts That Oppose Public Policy 1- Contracts That Disclaim Liability for Negligence
exculpatory clauses: in agreements, excusing themselves in advance (or at least limiting their liability) from any payment for injury or damages caused by their acts. -contract clause excusing a party from liability for negligence An exculpatory clause is generally held to be contrary to public policy and therefore void and unenforceable against an injured party.
Gaming
however is an activity that has been legalized, and consequently, those who participate are not subject to criminal prosecution, even if they make a profit while engaged in the activity. In return for legalizing certain forms of gaming, a state collects a percentage of the gaming profits.
There are two reasons a contract may be illegal:
if the contract is in violation of state statutes or if the contract is opposed to public policy.
lobbyng organization that promotes their interest
is the practice of trying to influence the members of a legislative body to pass or defeat certain bills -trying to influence lawmakers to vote for or against legislation -As a rule, lobbying is not illegal. -An agreement to influence a legislator's decision by using bribery, threats, or other improper means, however, is illegal
Licensing statues
laws that require some individuals to have a license or permit to practice their occupations. These laws are designed to protect people from dealing with unqualified individuals.
*Agreements that violate state statues *State legislatures have passed laws declaring certain types of agreements illegal and void because they cannot be performed without violating the state's civil and criminal statutes
licensing statutes, gambling statutes, usury statutes, or Sunday statutes *Keep in mind that a contract or a clause in a contract may be illegal even though there is no specific state statute prohibiting what is to be performed under the terms of the contract.