Bài giảng Business Law (13th edition) - Chapter 15: Illegality

ContractsIntroduction to ContractsThe Agreement: OfferThe Agreement: AcceptanceConsiderationReality of Consent3McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.ContractsCapacity to ContractIllegalityWritingRights of Third PartiesPerformance & Remedies3McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.IllegalityPAETRHC15“In a free society the state does not administer the affairs of men. It administers justice among men who conduct their own affairs.” Walter Lippman Learning ObjectivesMeaning of illegalityTypes of illegal agreementsEffect on contractsSpecial doctrines15 - *An agreement will be unenforceable because of illegality if the agreement involves an act or promise that violates a law or is against public policy Even if there was voluntary consent between two parties who have capacity to contractEffect: no remedy for breach of an illegal agreementIllegality 15 - *Agreements that violate a statuteAgreements that violate public policy:Agreements to commit a crimeAgreements promoting an illegal purposeAgreement to perform an act for which the person is not properly licensedExample: Riggs v. Woman to Woman P.C.Agreements in restraint of competition Types of Illegal Agreements 15 - *If sole purpose of an agreement is to restrain competition, it violates public policy A non-competition clause restrains competition, but courts enforce the clause if:It serves a legitimate business purpose, Restriction is reasonable in time, scope, and geographic areaIt does not impose an undue hardshipAgreements in Restraint of Competition15 - *In general, courts refuse to enforce and unconscionable contractA contract with the absence of meaningful choice and terms unreasonably advantageous to one of the partiesUCC 2–302 gives courts power to refuse to enforce or modify unconscionable contracts for sale of goodsSee Circuit City Stores, Inc. v. MantorUnconscionable Agreements15 - *A contract of adhesion, usually a contract on a standardized form, is offered by a party who is in a superior bargaining position on a “take-it-or-leave-it” basisAn exculpatory clause (release, liability waiver) in a contract attempts to protect one party from liability for damagesCourts enforce these contracts unless effect is overly harsh or oppressiveAdhesion & Exculpatory Clauses15 - *Test Your KnowledgeTrue=A, False = BAn agreement that promotes violating an environmental permit is illegalA person can demand restitution for breach of an illegal agreementNon-competition agreements are illegal agreements15 - *Test Your KnowledgeMultiple ChoiceA contract of adhesion:(a) is always illegal(b) are contrary to public policy(c) is a “take it or leave it” agreementAn exculpatory clause: (a) Protects one party from liability for damages (b) Promotes violation of a civil law(c) Is contrary to public policy and illegal15 - *Thought QuestionDo you think enforcing non-competition clauses in employment agreements is good public policy? 15 - *