BLAW Chapter 12

Agreements that restrain marriage

Agreements in restraint of marriage are void. - Ex: A person's promise to pay money to his or her child on the condition that the child never marries would be enforceable. If the child agrees to this arrangement and avoided marrying, he or she could not enforce the agreement

Agreements in violation of statutes

Agreements that violate government statutes are not enforceable by the courts. These are: - agreements made on Sundays or legal holidays - gambling and wagering agreements - usurious agreements - unlicensed transactions

Agreements to defraud creditors and other persons

Agreements to defraud lack the element of legality of purpose, and are void and unenforceable - Ex: an agreement to sell or give away property with the intention of defrauding creditors in anticipation of bankruptcy

Agreements that interfere with public service

All of the following agreements are illegal because the interfere with public service: - attempt to bribe or interfere with public officials - obtain political preference in appointments to office - pay on officer for signing a pardon - require one of the parties to the agreement to break a law - influence a lawmaking body for personal gain These activities do not involve specific contracts, but are illegal

Legal restraints and government-granted franchise

- There are times when agreements in restraint of trade are in the public interest and are legally enforceable. - A government-granted franchise is a legal monopoly in which a state or the federal government grants a firm or person a license to conduct a specific - usually essential - business such as a bus line, railroad, electric power company, cellular telephone company, TV cable service, and so on

Agreements that obstruct or pervert justice

- an agreement to conceal a crime or not to prosecute a criminal (such as a thief if he or she returns the stolen property) - an agreement to encourage a lawsuit in which one or more of the parties have no legitimate inters, called champerty - in agreement to give false testimony or to suppress evidence - an agreement to bribe a juror or a court official - an agreement to refrain from testifying as a witness in a legal action

Zoning regualtions

A community may designate certain areas as zones for such uses as light industrial, industrial, commercial, and residential. While zoning regulations are intended to provide security for the citizens of a community, they also may act as legal restraints of trade because they restrict where and how businesses may operate

Gambling and wagering agreements

A gambling agreement is ove in which performance by one party depends on the occurrence of an uncertain event - some states permit betting on horse or dog races - other states permit state-run lotteries - the state regulates the nature of the betting and usually derives considerable revenue from it - in some states, gambling on Native American reservations is legal - Examples of illegal gambling: office basketball pools; football pools

Private franchises

A special kind of business organization involving a contractual relationship between a franchisor (the parent firm) and a franchisee (the independent company) - in the case of a private franchise, the contractual relationship provides that the franchisor will supply certain services, such as management consulting, to the franchisee and will allow the franchisee to use the franchisor's name, join with others in national advertising, and secure other benefits - Ex: fast food restaurants

Exculpatory clauses

A statement in a contract that releases one party from liability resulting from his or her own negligence throughout the performance of the contract. Exculpatory clauses are contrary to public policy - one party is protected from the consequences of his or her own negligence or willful actions, while the other petty is not allowed to recover his or her losses Exculpatory clauses are illegal when used by companies in a business directly related to the public interest, such as banks, public utilities, and transportation providers

Effect of illegality

An agreement with an illegal purpose is usually void and unenforceable - if a divisible contract has several unrelated parts, and one or more parts have a legal purpose, then those components are enforceable - the part or parts that have an illegal purpose are not enforceable

Environmental and safety regulations

Federal and state legislatures have enacted statutes to protect the health and welfare of the general population from the effects of pollution of the atmosphere and bodies of water - safety regulations serve to protect the health and welfare of the general population of a community, customers, and employees - safety and environmental regulations serve as legal restraints of trade because they place limits and restrictions on how a firm operates

Usurious agreements

Interest is the charge for the use of borrowed money, generally expressed as an annual percentage of the amount of the loan (principal) - nearly every state has laws that regulate interest charges If a loan is made at an interest rate higher than that allowed by state law, the lender is guilty of usury - such usurious agreements are illegal and void - in many states, the usury statutes apply to retail installment credit sales and credit card transactions

Legality and the public interest

Legality of purpose is one of the essential elements of an enforceable contract. Although the parties to a contract are legally competent and have reached mutual agreement, the law still requires that the purpose of the agreement be legal and not contrary to the public interest

Unlicensed transactions

Most states require persons engaged in certain businesses, profession, and occupations to be licensed - persons in licensed professions and occupations include: doctors, dentists, lawyers, nurses, pharmacists, plumbers, barbers, and teachers An agreement with a person who does not have the required license is an unlicensed transaction and is generally illegal if the purple of the statute is regulatory and enforcement of the licensing requirements is clearly in the public interest - however, if the purpose of the licensing requirement is solely to raise revenue for the jurisdiction and not to ensure competence, the absence of a license does not make the agreement void

Illegal restraints of trade

Restraint of trade - agreements to suppress or eliminate competition which are illegal and unenforceable Monopoly power - when one or more people or firms control the market in a particular area or for a certain product - a monopoly is illegal because it results in a restraint of trade

Agreements against public policy

Some agreements are unenforceable because they are contrary to the interests of the public. These agreements: - obstruct or pervert justice - retrain marriage - interfere with public service - defraud creditors and other persons - contain exculpatory clauses

Agreements made on Sundays or legal holidays

Some statutes and local ordinances, referred to as blue laws, regulate the creation and performance of certain types of contracts on Sundays and legal holidays - in some jurisdictions, a contract that is made on Sunday but carried out on a weekday is invalid - in some states, a Sunday agreement must be ratified on a weekday - Contracts made on a legal holiday can generally be performed the next business day following the holiday Example include: - contracts involving the payment of a note - delivery merchandise

Classification of illegal agreements

Three broad classifications of illegal agreements: 1) agreements that are contrary to the common law 2) agreements that have been declared illegal by statute 3) agreements the courts have found to be against the security or welfare of the general public