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Contracts/Illegality: Difference between revisions
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Contracts in restraint of trade if proved to be reasonable can be enforced. When restraint is placed on an ex-employee, the court will consider the geographical limits, what the employee knows and the extent of the duration. Restraint imposed on a vendor of business must be reasonable and is binding if there is a genuine seal of goodwill. Under common law, contracts to [[Price fixing|fix prices]] are legal. Solus agreements are legal if reasonable. Contracts which contravene public policy are void. | Contracts in restraint of trade if proved to be reasonable can be enforced. When restraint is placed on an ex-employee, the court will consider the geographical limits, what the employee knows and the extent of the duration. Restraint imposed on a vendor of business must be reasonable and is binding if there is a genuine seal of goodwill. Under common law, contracts to [[Price fixing|fix prices]] are legal. Solus agreements are legal if reasonable. Contracts which contravene public policy are void. | ||
An agreement may be [[illegal]] directly under [[statutory law]], such as in [[California]] when statutes forbids certain types of contracts,<ref>[http://law.onecle.com/california/civil/1441.html Cal. Civ. Code § 1441]: A condition in a contract, the fulfillment of which is impossible or unlawful, within the meaning of the Article on the Object of Contracts, or which is repugnant to the nature of the interest created by the contract, is void.</ref><ref>[http://law.onecle.com/california/civil/1550.html Cal. Civ. Code § 1550, subd.(3)]: It is essential to the existence of a contract that there should be: A lawful object</ref><ref>[http://law.onecle.com/california/civil/1596.html Cal. Civ. Code § 1596]:The object of a contract must be lawful when the contract is made, and possible and ascertainable by the time the contract is to be performed.</ref><ref>[http://codes.lp.findlaw.com/cacode/CIV/5/d3/2/4/s1667 Cal. Civ. Code § 1667]: That is not lawful which is: 1. Contrary to an express provision of law; 2. Contrary to the policy of express law, though not expressly prohibited; or, 3. Otherwise contrary to good morals.</ref><ref>[http://codes.lp.findlaw.com/cacode/CIV/5/d3/2/4/s1668 Cal. Civ. Code § 1668]: All contracts which have for their object, directly or indirectly, to exempt any one from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.</ref><ref>[http://scocal.stanford.edu/opinion/tiedje-v-aluminum-taper-milling-co-26764 Tiedje v. Aluminum Taper Milling Co. , 46 Cal.2d 450] "A contract made contrary to public policy or against the express mandate of a statute may not serve as the foundation of any action, either in law or in equity, and the parties will be left, therefore, where they are found when they come to a court for relief."</ref><ref>[http://law.onecle.com/california/civil/1608.html Cal. Civ. Code § 1668]If any part of a single consideration for one or more objects, or of several considerations for a single object, is unlawful, the entire contract is void.</ref><ref>[http://law.onecle.com/california/civil/1953.html Cal. Civ. Code § 1953]: (a) Any provision of a lease or rental agreement of a | |||
dwelling by which the lessee agrees to modify or waive any of the | |||
following rights shall be void as contrary to public policy: | |||
(1) His rights or remedies under Section 1950.5 or 1954. | |||
(2) His right to assert a cause of action against the lessor which | |||
may arise in the future. | |||
(3) His right to a notice or hearing required by law. | |||
(4) His procedural rights in litigation in any action involving | |||
his rights and obligations as a tenant. | |||
(5) His right to have the landlord exercise a duty of care to | |||
prevent personal injury or personal property damage where that duty | |||
is imposed by law. | |||
(b) Any provision of a lease or rental agreement of a dwelling by | |||
which the lessee agrees to modify or waive a statutory right, where | |||
the modification or waiver is not void under subdivision (a) or under | |||
Section 1942.1, 1942.5, or 1954, shall be void as contrary to public | |||
policy unless the lease or rental agreement is presented to the | |||
lessee before he takes actual possession of the premises. This | |||
subdivision does not apply to any provisions modifying or waiving a | |||
statutory right in agreements renewing leases or rental agreements | |||
where the same provision was also contained in the lease or rental | |||
agreement which is being renewed. | |||
(c) This section shall apply only to leases and rental agreements | |||
executed on or after January 1, 1976. | |||
</ref> as well as through statutory or constitutional adoption of common law which includes said [[legal doctrine | doctrine]] in [[English contract law]], as has been done to varying degrees in most US states such as [[Wyoming]].<ref>[http://law.justia.com/codes/wyoming/2013/title-8/chapter-1/section-8-1-101/ Wyo. Stat. § 8-1-101]: The common law of England as modified by judicial decisions, so far as the same is of a general nature and not inapplicable, and all declaratory or remedial acts or statutes made in aid of, or to supply the defects of the common law prior to the fourth year of James the First (excepting the second section of the sixth chapter of forty-third Elizabeth, the eighth chapter of thirteenth Elizabeth and ninth chapter of thirty-seventh Henry Eighth) and which are of a general nature and not local to England, are the rule of decision in this state when not inconsistent with the laws thereof, and are considered as of full force until repealed by legislative authority.</ref> | |||
==See also== | ==See also== | ||
* [[English contract law]] | |||
* [[In pari delicto]] | * [[In pari delicto]] | ||
* [[History of contract law]] | |||
* [[Nemo auditur propriam turpitudinem allegans]] | * [[Nemo auditur propriam turpitudinem allegans]] | ||
Revision as of 14:44, October 31, 2014
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Template:Contract law An illegal agreement, under the common law of contract, is one that the courts will not enforce because the purpose of the agreement is to achieve an illegal end. The illegal end must result from performance of the contract itself. The classic example of such an agreement is a contract for murder.
However, a contract that requires only legal performance on the part of each party, such as the sale of packs of cards to a known gambler, where gambling is illegal, will nonetheless be enforceable. A contract directly linked to the gambling act itself, such as paying off gambling debts (see proximate cause), however, will not meet the legal standards of enforceability. Therefore an employment contract between a blackjack dealer and a speakeasy manager, is an example of an illegal agreement and the employee has no valid claim to his anticipated wages if gambling is illegal under that jurisdiction.
In Bovard v. American Horse Enterprises (1988),[1], the California Court of Appeal for the Third District refused to enforce a contract for payment of promissory notes used for the purchase of a company that manufactured drug paraphernalia. Although the items sold were not actually illegal, the court refused to enforce the contract for public policy concerns.
In Canada, one cited case of lack of enforceability based on illegality is Royal Bank of Canada v. Newell, 147 D.L.R (4th) 268 (N.S.C.A.), in which a woman forged her husband's signature on 40 cheques, totalling over $58,000. To protect her from prosecution, her husband signed a letter of intent prepared by the bank in which he agreed to assume "all liability and responsibility" for the forged cheques. However, the agreement was unenforceable, and struck down by the courts, because of its essential goal, which was to "stifle a criminal prosecution." Because of the contract's illegality, and as a result voided status, the bank was forced to return the payments made by the husband.
Contracts in restraint of trade are a variety of illegal contracts and generally will not be enforced unless they are reasonable in the interests of the contracting parties and the public.
Contracts in restraint of trade if proved to be reasonable can be enforced. When restraint is placed on an ex-employee, the court will consider the geographical limits, what the employee knows and the extent of the duration. Restraint imposed on a vendor of business must be reasonable and is binding if there is a genuine seal of goodwill. Under common law, contracts to fix prices are legal. Solus agreements are legal if reasonable. Contracts which contravene public policy are void.
An agreement may be illegal directly under statutory law, such as in California when statutes forbids certain types of contracts,[2][3][4][5][6][7][8][9] as well as through statutory or constitutional adoption of common law which includes said doctrine in English contract law, as has been done to varying degrees in most US states such as Wyoming.[10]
See also
- English contract law
- In pari delicto
- History of contract law
- Nemo auditur propriam turpitudinem allegans
References
- ↑ Bovard v. American Horse Enterprises, 201 Cal. App. 3d 832, 247 Cal. Rptr. 340 (1988).
- ↑ Cal. Civ. Code § 1441: A condition in a contract, the fulfillment of which is impossible or unlawful, within the meaning of the Article on the Object of Contracts, or which is repugnant to the nature of the interest created by the contract, is void.
- ↑ Cal. Civ. Code § 1550, subd.(3): It is essential to the existence of a contract that there should be: A lawful object
- ↑ Cal. Civ. Code § 1596:The object of a contract must be lawful when the contract is made, and possible and ascertainable by the time the contract is to be performed.
- ↑ Cal. Civ. Code § 1667: That is not lawful which is: 1. Contrary to an express provision of law; 2. Contrary to the policy of express law, though not expressly prohibited; or, 3. Otherwise contrary to good morals.
- ↑ Cal. Civ. Code § 1668: All contracts which have for their object, directly or indirectly, to exempt any one from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.
- ↑ Tiedje v. Aluminum Taper Milling Co. , 46 Cal.2d 450 "A contract made contrary to public policy or against the express mandate of a statute may not serve as the foundation of any action, either in law or in equity, and the parties will be left, therefore, where they are found when they come to a court for relief."
- ↑ Cal. Civ. Code § 1668If any part of a single consideration for one or more objects, or of several considerations for a single object, is unlawful, the entire contract is void.
- ↑ Cal. Civ. Code § 1953: (a) Any provision of a lease or rental agreement of a dwelling by which the lessee agrees to modify or waive any of the following rights shall be void as contrary to public policy: (1) His rights or remedies under Section 1950.5 or 1954. (2) His right to assert a cause of action against the lessor which may arise in the future. (3) His right to a notice or hearing required by law. (4) His procedural rights in litigation in any action involving his rights and obligations as a tenant. (5) His right to have the landlord exercise a duty of care to prevent personal injury or personal property damage where that duty is imposed by law. (b) Any provision of a lease or rental agreement of a dwelling by which the lessee agrees to modify or waive a statutory right, where the modification or waiver is not void under subdivision (a) or under Section 1942.1, 1942.5, or 1954, shall be void as contrary to public policy unless the lease or rental agreement is presented to the lessee before he takes actual possession of the premises. This subdivision does not apply to any provisions modifying or waiving a statutory right in agreements renewing leases or rental agreements where the same provision was also contained in the lease or rental agreement which is being renewed. (c) This section shall apply only to leases and rental agreements executed on or after January 1, 1976.
- ↑ Wyo. Stat. § 8-1-101: The common law of England as modified by judicial decisions, so far as the same is of a general nature and not inapplicable, and all declaratory or remedial acts or statutes made in aid of, or to supply the defects of the common law prior to the fourth year of James the First (excepting the second section of the sixth chapter of forty-third Elizabeth, the eighth chapter of thirteenth Elizabeth and ninth chapter of thirty-seventh Henry Eighth) and which are of a general nature and not local to England, are the rule of decision in this state when not inconsistent with the laws thereof, and are considered as of full force until repealed by legislative authority.
