Contracts II Outline

Contracts II Outline - Public Policy Considerations for...

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Unformatted text preview: Public Policy Considerations for Contract Enforcement I. Public Policy Considerations affecting Enforcement of Contract A. Illegal Contracts 1. Contracts that violate specific laws (Conduct Proscribed) a. Non serious activity or action (crime or tort) b. Facilitates or is the result/product of an illegal act. 2. Contracts rendered illegal by judicial decisions that they are against “public policy”. This is when public policy is derived from legislation related to the subject of the agreement even if the statute does not explicitly prohibit. (No explicit Prohibition in statute). a. Inconsistent with the law or social welfare. 3. As a general rule, neither party to an illegal contract may enforce it, the court will leave the parties to stew in their own juices. B. Sources of Public Policy 1. Statutes and Regulations 2. Judicial/Common Law 3. Perceived harm on society C. Reasons supporting the limited use of Public Policy 1. Do not want courts making too many public policy reasons because it will overstep their boundaries and expand their ability to create common law. The power to create laws resides primarily in the legislature, and therefore, we do not want the courts to use public policy too liberally. 2. However, we want expectation interests to be honored as a social interest. This will require some public policy to be used to reflect the best interest of society. 3. Balance between competing societal interests and the harm to society if certain types of contracts are enforced and the interest of society in generally enforcing contracts. a. Contract with a hitman demonstrates a situation were a balancing of interest is not necessary to conclude that the contract should not be enforceable for public policy reasons. This is an illegal contract. b. Contract requiring delivery of goods that calls for parking in a no parking zone that therefore is a parking violation. A balancing is required here because the criminal offense/tort is minor enough that a court will likely find that it is not an illegal contract and therefore should be enforced. c. If the law directly states that a certain type of contract is not enforceable, then no balancing is required. The contract will be found illegal and therefore not enforceable. d. All other types of contracts that are going to be unenforceable for public policy reasons should be applied to the balancing test. 1 D. Restatement § 178- Principles to be used for Balancing 1. Promise or term is unenforceable because of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in circumstances against the enforcement. 2. Weighing the interest in the enforcement of a term, account is taken of… a. Strength of the parties justified expectations b. Any forfeiture that would result if enforcement were denied....
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This note was uploaded on 04/15/2008 for the course CONTRACTS I taught by Professor Alford during the Spring '08 term at Pepperdine.

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Contracts II Outline - Public Policy Considerations for...

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