Illegal either because it is contrary to that state’s statutes Wagering agreements- gambling contracts Insurance contracts- risk shifting contracts; risk creating not enforceable Licensing statutes- recovery of damages from an unlicensed professional sometimes is not allowed Usury- interest ceilings or contrary to the public policy of the state as defined by its courts contracts in restraint of trade (non-compete)(page 348)
the ancillary covenant- part of a bigger agreement eX: promise not to compete with reasonableness: sale of business contracts employment contracts Cannot sell someone 2 pounds of cocaine with a contract Judges can also determine that legal matter is still not good for society (public policy exceptions) Like non-compete agreements: one party agrees not to compete with the other Courts will sometimes rewrite these under the “blue pencil” rule Exculpatory clauses: people and business seek to avoid liability for simple negligence or other acts by claiming they are not responsible. Works with recreation but not with conventional scenarios like leases/employment contracts/bailments. They are not enforceable if the contract involves a matter that substantially affects the public interest. Bailment: the owner of an article of personal property temporarily relinquishes the possession and control to another. Bailee then must be liable if something bad happens to it. Seigneur v National Fitness Institute (page 353) Find the contract unconscionable (shock the conscience of the court) 2 types of unconscionability procedural unconscionability: the clause was not adequately communicated (hidden in the fine print) or that there was disparity of bargaining power between the parties ex: immaturity, old age, lack of sophistication, mental disability, inability to speak the language, lack of education substantive unconscionability: the terms of the provision are so unfair they are oppressive in nature, case-by-case basis Doughty v Idaho Frozen Foods Williams v. Walker-Thomas Furniture (page 357) UCC says court can refuse the contract, enforce the remainder of the contract without the clause, or limit the application of the clause Systems and Software v. Barnes (page 349) (5) Contracts must be made by people who have legal capacity : No legal ability
Children under 18 Minors have substantial power to back out of agreements (all contracts are voidable) Only the minor has the power to disaffirm Usually can always back out, even after the contract is complete There are some exceptions: minor lied about age, minors who use common carriers, minors who buy necessaries, “tender years” so young they don’t understand (void) treated as an adult?- minors who are married, making contracts under court supervision (child actors) ordinary contracts- contracts which the goods/services being purchased are not necessities of life executory- before either party has started
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