Illegal Agreements Chapter 10

Illegal Agreements Those that involve contracting for an illegal act generally are void and unenforceable Gambling – usually forbidden or regulated(per state) Lottery – prize, chance, and consideration Lottery – prize, chance, and consideration Wager – a bet on the uncertain outcome of an event (game) Legal Forms Casinos Casinos Pari-mutual betting Pari-mutual betting State run Lotteries State run Lotteries Bingo Games Bingo Games

Illegal Agreements Agreements to pay usurious interest All states provide that lenders of $ may not charge more than a specified maximum rate of interest (usually 18%), or usury All states provide that lenders of $ may not charge more than a specified maximum rate of interest (usually 18%), or usury If unspecified, lender can’t go above legal rate of interest – usually 7-12 percent If unspecified, lender can’t go above legal rate of interest – usually 7-12 percent Agreements involving illegal discrimination May violate the constitution or other statutes May violate the constitution or other statutes Ex. Subdivision and home buyer agreement Ex. Subdivision and home buyer agreement

Illegal Agreements Agreements that obstruct legal procedures Pay non-expert witness to testify Pay non-expert witness to testify Bribe jurors Bribe jurors Withhold information about illegal activity for money Withhold information about illegal activity for money Agreements made without a required competency license People in trades, such as plumbers, barbers, electricians, or professionals such as lawyers, doctors People in trades, such as plumbers, barbers, electricians, or professionals such as lawyers, doctors

Illegal Agreements Agreements that negatively affect marriage Pay for citizenship Pay for citizenship Father forbidding daughter Father forbidding daughter

Restraining Fair Trade Price fixing Competing firms agree to all sell for the same price Competing firms agree to all sell for the same price Bid rigging – agreement between competitors to have the “lowest bid” on a particular job Bid rigging – agreement between competitors to have the “lowest bid” on a particular job Resale price maintenance Can have a “suggested retail” but can’t agree on a price Can have a “suggested retail” but can’t agree on a price Allocation of Markets – competitors divide markets and agree not to sell outside (Ex. Ford dealerships won’t sell outside county)

Employee agreements not to compete LEGAL IF: LEGAL IF: Time frame is reasonable Limited Geographic area is reasonable Employer’s interest is reasonable protected “Trade Secrets” Ex. An agreement not to compete for 2 years in the city or county where the former employer is located would be enforceable

Think Critically… Razer agreed with several published articles that criticized laws prohibiting the production, possession, and use of marijuana. The authors of the articles claimed such legislation was unrealistic and often violated civil rights. Razer agreed so heartily that he bought several dozen marijuana plants from a friend. Then he rented a patch of land and persuaded the owner, Tom, to accept a share of the proceeds from the sale of his anticipated crops as rent. After harvesting the first crop, Razer sold most of the product to a local drug dealer for $7,500. Were Razer’s agreements legal? All of his agreements were criminal and therefore VOID.