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Bell Ringer

Bell Ringer. What is legality? What makes something legal/illegal? What could make a contract illegal?. CH 9: Legality . Legality. Legality is the last of the 6 elements that makes a legally binding contract For a contract to be binding it must be legal A contract can be illegal if

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Bell Ringer

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Presentation Transcript

  1. Bell Ringer • What is legality? • What makes something legal/illegal? • What could make a contract illegal?

  2. CH 9: Legality

  3. Legality • Legality is the last of the 6 elements that makes a legally binding contract • For a contract to be binding it must be legal • A contract can be illegal if • The agreement violates the law • The agreement results in criminal penalty • Making an agreement that would be illegal is in itself illegal

  4. In Pari Delicto & Divisible Contract • If certain aspects of a contract can be successfully performed by themselves the contract is said to be divisible • The court can therefore rule on certain parts of a contract but not on others • If both parties enter into a contract known to be illegal they are said to be in pari delicto (In equal fault)

  5. Agreements that Violate Statutes • Criminal Statutes • Agreements that require one party to commit a tort or a crime • Usury Statute • Charing more than the legally allowable amount of interest (Usury)

  6. Gambling Statutes • Gambling when it is illegal (or the sport is illegal), or when gambling is illegal using something that gives one side an unfair advantage • Sunday Statutes • When a certain activity is illegal to perform on a Sunday. (Blue light Laws) • Selling Alcohol on a Sunday (before a certain time)

  7. Agreements Contrary to Public policy • Some agreements are not illegal because of the action, however they may be illegal because they are contrary to public policy • Examples of violating public policy • Unreasonable restraint of trade • Obstruct Justice • Commit Fraud • Interfere with marriage

  8. Contract Not to Compete • In certain situations owners or employees could agree to not seek active employment in a field or area for a certain amount of time • This is known as a restrictive agreement, or a non-compete clause, and will be upheld by a could if the time limit and other restrictions are reasonable.

  9. Price Fixing • Free market economies allow for prices to rise and fall as necessary. • Price fixing is when competitors agree on a price range, and only sell that item within that specific range. • This is often against some state and federal law

  10. Agreement to Obstruct Justice & Agreements for Breach of Duty/Fraud • Agreement to Obstruct Justice • Any contract that interferes with justice is illegal. Preventing someone from arrest, encouraging a lawsuit, or lying under oath • Agreements for Breach of Duty/Fraud • When a public official fails to administer their office in the best interest of their constituents, often for private personal gain.

  11. Effect of Illegality • Courts tend to not aid either party in an illegal contract • The parties are on their own to solve the problem • As the party is not enforceable a court will not rule on it • The exception is when parties are not found to be at equal fault for the situation.

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