Chapter 15 - Chapter15Illegality TextbookSlides...

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Chapter 15 – Illegality Textbook Slides “In a free society, the state does not administer the affairs of men.  It  administers justice among men who conduct their own affairs.”   - Walter Lippman Learning Objectives: - Meaning of Illegality - Types of illegal agreements - Effect on Contracts - Special Doctrines Illegality: - An agreement will be unenforceable beause of illegality if the  agreement involves an act or promise that violates a law or is against  public policy o Even if there was voluntary consent between two parties who  have capacity to contract - Effect: no remedy for breach of an illegal agreement Agreement that Violates Statutes: - Sometimes government legislatures enact statutes that declare  certain types of agreements unavoidable, unenforceable, void, or  voidable - Examples: o New law changes the limits allowed for interest to be charged  on a loan o New prohibiting creation of a landfill in environmentally sensitive  areas Agreements that Violate Public Policy: - Agreements that violate public policy include o Agreements to commit a crime o Agreements promoting an illegal purpose
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o Agreement to perform an act for which the person is not  properly licensed o Agreements in restraint of competition Licensing Statutes - A common regulatory statute requires a person to obtain a license,  permit, or registration before engaging in a certain business or  profession - If the purpose of the statute is to protect the public against dishonest  or incompetent practioners, then an agreement is unenforceable if an  unlicensed person agrees to do an acct that requires a license Agreements in Restraint of Competition - If the sole purpose of the agreement is to restrain competition, it  violates public policy and is illegal - If the restraint on competition was part of an otherwise legal contract, 
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