Ex. loans made to corporations In recent years, states have adopted special statutes permitting higher rates of interest on other specified kinds of loans Interest rates charged by issuers of bank credit cards and by department stores on their revolving credit card accounts = 18% Home/construction loans, care loans, loans by credit unions = 18-25%
No determination can be made as to the legality or effect of given loans without inspecting the statutes of the state in which the transaction took place Contracts Contrary to Public Policy Contracts in Restraint of Trade Contracts that unreasonably restrain trade or competition in interstate commerce are in violation of one or more federal antitrust statutes (Sherman and Clayton acts) Restraint of trade that is not subject that the Sherman or Clayton acts will set it aside under common law principles: Contracts that contain covenants not to compete : agreements in which one party promises not to compete with another (ex. employment contracts) Lawful if: 1. The agreement must be of an " ancillary " nature Ancillary covenant : a subsidiary or auxiliary part of a larger agreement Reasonableness -- Sale of Business Contracts The interest is in the goodwill of the business A restrictive covenant on the part of the seller is thus enforceable A reasonable geographic restriction Reasonableness -- Employment Contracts Restrictive covenants are reasonable if; 1. The restriction is reasonably necessary to protect the employer 2. The restriction is "not unreasonably excessive" as to the employee 2. The promise must have a legitimate business interest that warrants temporary protection from competition 3. The agreement must be reasonable in its scope so that it does not limit competition more than is reasonably necessary to protect the promisee's legitimate interest Blue-Pencil rule : some courts find that an unreasonably broad time, geography, or activity restriction renders a restrictive covenant completely unenforceable Exculpatory Clauses : a contract provision that relieves one party of liability if damages are caused during the execution of the contract The Public Interest Inquiry: an exculpatory clause will not be enforceable to relieve one of liability for negligence if the contract involves a matter that "substantially affects the public interest" Contracts involving goods or services that are essential to daily life Effective if the clause is: Either very conspicuous or specifically called to the attention of the potential plaintiff Written in a way that clearly informs the potential plaintiff that the drafter of the clause seeks to be relieved from liability for its negligence or the negligence of its employees Bailment Contracts : where one party delivers goods to the other upon return basis to fulfill a specific purpose Bailment: occurs when the owner of an article of personal property temporarily relinquishes the possession and control of it to another
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