BUS311_chapter_05

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Unformatted text preview: ays. Best, Lucas.” If Lucas now refuses to sell, Juan has the necessary writing to enforce the contract. But if Juan backs out, Lucas has nothing signed by Juan, and the deal is unenforceable. 5.5 Illegality An agreement may be considered illegal if it would 1. violate a statute; 2. result in commission of a tort; or 3. violate public policy. The first two are quite easy to identify. Some common examples of agreements that violate statutes would be usurious loan agreements and gambling arrangements. Usury statutes set the permissible amount of interest that can be charged on a loan or credit transaction. If a creditor charges a higher amount, the agreement is void for illegality. At least some types of gambling are illegal in most states. For example, in a jurisdiction that allows only state-sponsored lotteries and charity bingo, you could not sue to enforce your status as winner of the office Super Bowl pool. An example of the second type of illegality occurs when the contract subject matter might not be illegal, but the circumstances are such that performing the contract will result in a tort. Example 5.21. Lena hires Dan to sink a well on...
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