1. Legal Purpose & Proper Form
Chapter 10

2. Objectives Identify various forms of unenforceable illegal agreements
Section 10-1
Identify various forms of unenforceable illegal agreements
Specify agreements that, although illegal, the courts will enforce

3. Illegal Agreements Illegal Lotteries Usurious Loans
Discriminatory agreements
Agreements that obstruct legal procedures
Agreements made without a competency license
Agreements that affect marriage negatively
Agreements that restrain trade unreasonably
Agreements not to compete

4. Which Agreements are Illegal?
Illegal Lotteries
3 elements:
Prize
Chance
Consideration
Wager
Bet on uncertain outcome of event
Legalized lotteries:
Casino
Pari-mutuel betting
State-run lotteries
Bingo games & pull- tab betting

5. Which Agreements are Illegal?
Agreements to pay usurious interest
Lenders of money may not charge more than a specified max rate of interest
18% is common max
Lending higher than state max = usury
Agreements involving illegal discrimination
Unenforceable b/c violate statutes

6. Which Agreements are Illegal?
Agreements that obstruct legal procedures
Delay or prevent justice
Pay non-expert witnesses
Bribe jurors
Refrain from informing on alleged crime in exchange for money
Compounding a crime

7. Which Agreements are Illegal?
Agreements made w/o a required competency license
Persons in certain occupations & business pass exams & receive license
Contrasting = revenue license
Purpose is only to raise revenue rather than protect public
Made by unlicensed persons are valid

8. Which Agreements are Illegal?
Agreements that affect marriage negatively

9. Which Agreements are Illegal?
Agreements that restrain trade unreasonably
Price fixing
Competing firms agree on same price
Bid rigging – competitors bid on jobs agree that 1 bidder will have the lowest bid for a particular job
Resale Price Maintenance
“suggested retailers price” – may refuse to sell if won’t charge that amt
Allocation of markets
Same injury to competition produced by price fixing can be achieved if competitors divide markets b/w themselves

10. Which Agreements are Illegal?
Agreements not to compete
When persons are hired they may agree that they will not compete with employer after the employment terminates
Illegal if:
Time period for the limitation is too long
Geographic area to which limitation applies
Employer’s interest protected by limitation (trade secrets)

11. When will the Courts Enforce Illegal Agreements?
Most illegal agreements are void and unenforceable
Illegality is slight or a party is relatively innocent of wrongdoing – court will allow restitution
Examples include:
Rescind before
prohibition act
Contract is divisible
Protected Victims
Excusably Ignorant

12. When will the Courts Enforce Illegal Agreements?
Protected Victims
Purchase something that doesn’t exist
Restitution
Restoring of the party involved to his or her original position
Excusably Ignorant
Don’t know that contract is illegal
Other party knows transaction is illegal
Illegality is minor

13. When will the Courts Enforce Illegal Agreements?
Rescission prior to illegal act
Divisible Contracts
Courts can enforce legal part of contract if it is divisible
Unconscionability occurs when there is a grossly unfair contract that parties under ordinary circumstances would not accept
s/he was presented w/ a take it or leave it contract
Other party had overwhelming bargaining power
No viable alternative in marketplace
Injustice can only be avoided by holding certain terms

14. Ch. 10 Legal Purpose Assignments: P.176 1-7, 9, 11
Reteach 10-1 worksheet

15. Objectives
Section 10-2
Explain why the Statute of Frauds is necessary and what it requires
Identify the main instances when the Statute of Frauds requires a writing
Understand the rules of contract interpretation

16. Why have a Statute of Frauds?
Several types of contracts are required to be in writing to be enforceable…
Contracts to buy & sell goods more $500
Contracts to buy & sell real property
Contracts require more 1yr to complete
Promises to stand good for debts of another
Promises to give something of value in return for a promise of marriage

17. Contracts within the Statute of Frauds
Executed contracts
One that has been fully performed
Executory contract
One that has not been fully performed
Statute of Frauds not signed, not in writing is unenforceable
Quasi-contract
Exists when some element of an enforceable contract is missing, yet courts award money to prevent the unjust enrichment of one party

18. Why have a Statute of Frauds?
Requirements of the writing
State’s version of the UCC & applied only to sale of goods
Applied to all other contracts & is contained in a state’s Statute of Frauds

19. Statute of Frauds Requirements - Writing
Names of parties
Description of the subject matter
Price
Quantity
Signature
Other essential terms
Time, method of delivery, terms of payment, date of transfer

20. Statute of Frauds Requirements - Writing
UCC requirements
Writing must indicate
Quantity of goods
That a contract has been created b/w parties
Special rules for signatures
Only parties whose signatures actually appear on contract may be sued for enforcement

21. Types of Contracts within Statute of Frauds
Contract for Sale of Goods for $500 or more
Personal property (not real property)
UCC provides exceptions
Goods are ordered specially & aren’t suitable to be sold to others
Goods have been ordered & paid for & seller accepted $
Goods have been received & accepted by buyer
Party against whom enforcement is sought admits during legal proceedings that oral was made

22. Types of Contracts within Statute of Frauds
Contract to sell an interest in real property
Oral leases for 1 yr or less = enforceable
Exceptions if seller delivered deed or if buyer:
Made partial or full payment
Occupied the land
Made substantial improvements to land

23. Types of Contracts within Statute of Frauds
Contracts that require more than 1yr to compete
Yr begins at time contract is made

24. Types of Contracts within Statute of Frauds
Contract to pay a debt or answer for another’s debt or the debts of an estate
Collateral promise
Oral agreement (father pays daughter’s rent)
Needs to be in writing to be enforceable
Primary promise
Cosigner on a lease
Doesn’t need to be in writing
Exception – Main Purpose Rule
3rd party liable for oral promise to pay another’s debt if the main purpose of promise servers the promisor’s own interest

25. Types of Contracts within Statute of Frauds
Contract for which the consideration is marriage
Signed writing required for agreement in which one party promises to marry in return for something more than the other’s promise to marry

26. How are Contracts Interpreted?
Acknowledgement of final agreement
Both parties agree terms in written contract constitute the entire & final agreement

27. How are Contracts Interpreted?
Specific rules of Interpretation
Analysis
Courts interpret terms of parties’ principal objective
Conflicting terms
b/w printed or typewritten/handwritten
Whichever seems to have been done last is what courts will base decision on

28. How are Contracts Interpreted?
Specific rules of Interpretation
Words
Plain & normal meaning of ordinary words will be used to determine meaning
Ambiguities
Courts will interpret against party who drafted contract
Implied Reasonableness
“payment in cash” = use of a check

29. How are Contracts Interpreted?
Parol Evidence Rule
Courts feel that it is reasonable expectation that parties consider terms carefully
Rule makes final writing source of evidence about the terms
Consists of words spoken prior to the execution of final writing or at time of signing

30. How are Contracts Interpreted?
Parol Evidence Rule
Exceptions to rule
Clarify ambiguities in written agreement
If the written contract was not intended to be a complete agreement
If a condition necessary to the existence of the contract never occurred
If fraud, forgery, illegality, mistake, or misrepresentation occurred
To show parties reached another agreement or terminated
To show that the contract is voidable b/c a party lacked contractual capacity

31. Ch. 10 Proper Form Assignments: Review: Case P.185 1-4, 6, 7
Reteach 10-2 worksheet
Review:
P , 20
Case
P 189

32. Ch. 10 Quiz (12pts +8EC) What are 3 elements of a lottery?
Define compounding a crime.
T/F A company may ask an employee to not work for a competitor for over 20yrs.
What are the 5 types of contracts that must be in writing?
Define parol evidence rule.
Extra Credit: Name the 8 illegal agreements.