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Legal Purpose and Proper Form.  Agreements that involve contracting for an illegal act generally are void and unenforceable.

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Presentation on theme: "Legal Purpose and Proper Form.  Agreements that involve contracting for an illegal act generally are void and unenforceable."— Presentation transcript:

1 Legal Purpose and Proper Form

2  Agreements that involve contracting for an illegal act generally are void and unenforceable

3  Illegal Lotteries Three elements 1.Prize – something of value for one or more winners 2.Chance – winner decided solely by luck 3.Consideration – payment is required to participate  Wager – is a bet on the uncertain outcome of an event

4  Casinos – permits traditional games such as keno, blackjack, roulette and the like  Pari-mutuel betting – form of betting where the winner of the horse race share the total prize pool  State-run lotteries – winner split the jackpot  Bingo games and pull-tab betting

5  Agreements to pay usurious interest Lenders of money may not charge more than a specified interest rate 18% is the common maximum but it may vary from state to state Usury – lending money at a rate higher then state allows State allow higher rates for “payday” loans – under $1500.

6  Agreements involving illegal discrimination  Agreements that obstruct legal procedures Pay non-expert witnesses in a trial to testify or pay for false testimony Bribe jurors Compound a Crime – Refrain from informing on or prosecuting an alleged crime in exchange for money

7  Agreements made without a required competency license License required for people of certain occupations and businesses – must pass exam Person who lacks license may not enforce the contracts that make Revenue Raising License – license people who raise money  Contracts are valid

8  Agreements that affect marriage negatively Pay someone to promise to marry you Pay someone not to marry Pay someone to divorce

9  Agreements that restrain trade unreasonably Price Fixing – Competing firms agree on the same price  Unenforceable Bid Rigging – Competitors agree that one bidder will have the lowest bid Resale Price Maintenance Allocation of Markets – divide the market are illegal and unenforceable

10  Protected Victims  The Excusably Ignorant – Can enforce legal part of contract or obtain restitution Excusably ignorant is: 1.Does not know the contract is illegal 2.The other party knows the transaction is illegal 3.The illegality is minor  Rescission Prior to Illegal Act  Divisible Contracts – Contain combination of legal and illegal provisions

11  Occurs when there is a grossly unfair contract parties under ordinary circumstances would not accept

12  The victim must show: 1. He or she was presented with a take it or leave it contract 2. The other party had overwhelming bargaining power 3. There is no viable alternative in the marketplace 4. Injustice can only be avoided by holding certain terms or the whole contract unconscionable.

13  Required to be in writing 1. Contracts to buy and sell goods for a price over $ Contracts to buy and sell real property or any interest in real property 3. Contracts that require more than one year to complete 4. Promises to stand good for the debts of another or of an estate 5. Promises to give something of value in return for a promise of marriage

14  A contract that has been fully performed Both parties have done all they promised to do

15  Contract that has not been fully performed  Something agreed upon remains to be done  If the contract falls within statute of fraud in unenforceable  Any consideration exchanged can be recovered by suing based on Quasi- Contract

16  Exists when some element of an enforceable contract is missing, yet the courts award money to prevent the unjust enrichment of one party

17  Writing need not utilize any special form to satisfy the Statute of Frauds as long as the writing contains certain key elements

18 1. Names of the parties 2. A description of the subject matter 3. Prices 4. Quantity 5. Signature 6. Other essential terms Time or method of delivery Terms of payment Method of financing Date for transfer of possession

19 1. The quantity of goods 2. That a contract has been created between the parties

20  Under the Statutes of Frauds, only the parties whose signatures actually appear on the contract may be sued for enforcement  Under the UCC, a contract proposal in writing signed by one party and sent to the other is enforceable against the other party unless the other party objects to the terms within 10 days of receipt.

21 1. Contract for the Sale of Goods for $500 or more Modification of a contract that was below $500 and now the total price is above $500, then it must be in writing

22  UCC exceptions to the Statute of Frauds: When goods are ordered to be specially manufactured and they are not suitable to be sold to others When goods have been ordered and paid for and the seller has accepted payment When goods have been received and accepted by the buyer When the party against whom enforcement is sought admits during legal proceedings that an oral contract was made

23 2. Contracts to Sell an Interest in Real Property Includes land and buildings permanently attached to the land Transfer of title, ownership of real property, or of lesser interests, must be in a properly signed writing to be enforceable.  Exception: 1.Made partial or full payment 2.Occupied the land 3.Made substantial improvements to the land

24 3. Contracts that require more than one year to complete Begins at the time the contract is made, not at the time contractual performance is to begin

25 4. Contracts to pay a debt or answer for another’s debt or the debt of an estate Collateral Promise – Promise to pay a debt or default of another Primary Promise – Promise to pay another’s debt that is not conditioned upon the other person’s failure to pay. Exception: Main Purpose Rule – Third party is responsible for an oral promise that serves the promisor’s own interest

26 5. Contracts for which the consideration is marriage A signed writing is required for agreements in which one party promises to marry in return for something more than the other’s promise to marry. If one party breaches either an oral or written contract to marry, the victim of the breach may successfully sue for damages

27  Acknowledgement of Final Agreement Issues develop involving preceding oral agreements not reflected in the ultimate contract. Contract clause stating both parties agree that the terms in the written contract constitute the entire and final agreement

28  Specific Rules of Interpretation Court will interpret the contract in terms of the parties’ principal objective Court can see which clauses should prevail over others If agreement can be interpreted in two ways, the courts will choose the way that renders the agreement a contract

29  Conflicting Terms If there is a conflict between a printed form contract and something typewritten or handwritten theron, the later writings, not the conflicting typeset print, determines the contracts meaning

30  Words The plain and normal meaning of ordinary words will be used to determine the meaning of the contract Prior relationships may indicate how the words should be interpreted

31  Ambiguities – Things that can be understood in two or more possible ways Courts will interpret against the party who drafted the contract

32 Implied Reasonableness  Contracts often include implied terms as a matter of reasonableness  When no time for performance is mentioned, a reasonable time is allowed

33 Parol Evidence Rule  Makes the final writing the source of evidence about the terms of the contract

34  Exceptions to Parol Evidence Rule: 1.To clarify ambiguities in the written agreement 2.If the written contract was not intended to be a complete agreement 3.If a condition necessary to the existence of the contract never occurred 4.To show the parties reached another agreement or terminated the contract under consideration after executing the written contract 5.To show that the contract is voidable because a party lacked contractual capacity


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