Business Law Chapter 12: Legality

Restraint-of-trade cases arise in two settings:

1) Sale of a business and an attendant agreement not to compete with the purchasers. 2) An employee's agreement with employer not to compete should the employee leave for any reason.

Exculpatory Clause exception under two circumstances

1) When it exempts employer from liability to employee for injury in the course of his employment 2) When it exempts one w/a duty of public service who receives compensation from liability to one whom the duty is cured

Exculpatory clauses valid if:

1)Agreement doesn't involve a business generally thought suitable for public regulation 2)Party seeking exculpation is not performing a business of great importance to public or practical necessity 3)Party does not purport to be performing service for anyone who comes along 4)Parties are dealing at arm's length able to bargain contract 5)Person or property of the purchaser isn't place under control of the seller, subject to their agents carelessness 6)Clause is conspicuous and clear

What is the three-step analysis for determining if unlicensed professional performs a service, are they entitled to the service charge?

1)Is a license required, others may be performed w/out or w/credentials difference lying in what the professional may tell the public. 2)Whether licensing statute explicit bars recovery by someone who performed work while unlicensed. 3)Distinguish between "regulatory" and "revenue" licenses.

If covenant is ruled unlawful, courts can pursue one of three courses:

1)Refuse entire covenant 2)Delete part of agreement that is unreasonable 3)Rewriting objectionable clause

Regulatory License

A license to practice a trade or profession that requires no competency test to obtain but only a registration.

Gambling

Betting on an outcome on an outcome of event where betters have no control where the purpose is to play w/the risk.

Usury

Charging interest in excess of the legal limit.

Unconscionable Contract

Contract so unfair as to be unenforceable

Contract of Adhesion

Contract to offeree to take it or leave it.

Gambling Contracts

Contract whose performance by one party is contingent on the outcome of a bet; unenforceable by statute in most jurisdictions.

Sunday Contracts

Contracts entered to on Sundays

Obstructing Administration of Justice/Violate Public Duty

Contracts that obstruct administration of justice or call a public official to violate a public duty are void and unenforceable

Rule of Common-Law Restraint of Trade

General rule: not every restraint of trade is unlawful; only unreasonable ones are. Exception: An agreement that restrains trade will be construed as unreasonable unless it is ancillary to a legitimate business interest and is no greater than necessary to protect the legitimate interest.

Rules for Gambling Contracts

General: Because outcome is contingent on events out of control of the parties it is considered a bargain not a wager. Exception: Common law permits sale or purchase of securities

Rules for Sunday Contracts

General: Contracts entered into on Sundays are enforceable and valid; bans certain acts: work, travel, sports. Exception: Mutual Promise to marry and contracts necessary or charity

Rules for Usury

General: One that sets the maximum allowable interest that may be changed on a loan, a matter of real importance (penalty levied on the lender [forfeiture of interest, both principal and interest]) Exception: Law doesn't apply (var. by state): small consumer loans, pawn shop loans, payday loans and corporate loans

Revenue License

Generally requires no examination and is imposed for the sake of raising revenue and to ensure that practitioners register their address so they can be found if a disgruntled client wants to serve them legal papers for a lawsuit.

Injunction

Order directing a person to stop doing what they shouldn't do.

Noncompete agreements

Party agrees not to pursue a similar profession or trade in competition against another party.

Exculpatory Clause

Term in a contract by which one party relieves itself in advance of liability

Restitution

The return or restoration of some specific thing to its rightful owners or status.

Postnuptial agreement

contract made by spouses after marriage in which they agree on property division

Prenuptial agreement

premarital contract by spouses agree on property division