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Insane but not Adjudged Insane– being insane but not havingbeen adjudged insane by a court or an administrative agency. A contractentered into by such person is generally voidable. Some states hold thatsuch a contract is void. Intoxicated Persons– a person who is under contractual incapacitybecause of ingestion of alcohol or drugs to the point of incompetence.Intoxicated persons are liable in quasi-contract to pay the reasonable valuefor necessaries they receive. Lawful Contract– a contract that has a lawful object. Illegal Contract– pg 211- a contract that has an illegal object. Suchcontracts are void. Usury Law– a law that sets an upper limit on the interest rate that can becharged on certain types of loans. Gambling Statutes– statutes that make certain forms of gambling illegal. Effect of Illegality– a doctrine that states that the courts will refuse toenforce or rescind an illegal contract and will leave the parties where it findsthem. In Pari Delicto– a situation in which both parties are equally at fault in anillegal contract. Contract Contrary to Public Policy– a contract that has a negativeimpact on society or that interferes w/the public’s safety and welfare. Immoral Contract– a contract whose objective is the commission of an actthat society considers immoral. Contract in Restraint of Trade- a contract that unreasonably restrainstrade. Licensing Statute– a statute that requires a person or business to obtain alicense from the government prior to engaging in a specified occupation oractivity. Regulatory Statute– a licensing statute enacted to protect the public. Revenue-Raising Statute– pg 215 – a licensing statute with the primarypurpose of raising revenue for the government.
Exculpatory Clause (release of liability clause)– A contractual provisionthe relieves one or both of the parties to a contract from tort liability forordinary negligence – AKA a release of liability clause. Covenant not to Compete (non-compete clause)– a contract thatprovides that a seller of a business or an employee will not engage in asimilar business or occupation w/in a specified geographical area for aspecified time following the sale of the business or termination ofemployment. Also called a non-compete clause. Contracts of Adhesion– preprinted forms whose terms the consumercannot negotiate and that they must sign in order to obtain a product orservice. Unconscionable Contract– a contract that courts refuse to enforce in partor at all because it is so oppressive or manifestly unfair as to be unjust.