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Exam 13: Illegal Bargains

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Question 1

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Courts will not enforce either illegal agreements or agreements induced by criminal conduct.

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Question 2

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The courts readily enforce a covenant not to compete during the period of employment.

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An agreement for an illegal substance will be enforced by the courts if all other elements of the contract are present.

Carl and Ron are both engaged in road construction work.They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Ron will bid on the other, so that they both have work for the summer.When the bids are opened, Carl realizes that Ron has bid on both jobs.Ron is awarded both contracts.Carl now wants to sue Ron for breach of contract.

Courts usually will require evidence for a transaction to be usurious.What facts will the courts consider as evidence of usury?

Greg signs an employment contract with Marcial Co.If a court determines that the covenant not to compete contained within the contract is illegal, the whole contract will be held unenforceable.

Maximum rates of interest that are permitted under usury statutes are uniform from state to state.

Philip has been in training for several months and now plans to run in the school-sponsored, 10-mile, fun-run mini-marathon.He completes and signs an entry blank which contains the statement, "I hereby agree to hold the sponsors harmless for any injury sustained as a result of participation in this event no matter how such injury may be caused." a.What is the legal term for this clause in the agreement? b.Is the clause valid and legally enforceable? Explain its legal effect.

An agreement to pay a public officer something extra for performing his official duty is enforceable.

Al, an accountant, has a tax service and accounting business in Redwood City.He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm.In the sale contract, he agrees that he will refrain from practicing accounting anywhere within a 100-mile radius of Redwood City for a period of two years.However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home.In this situation:

A(n) __________ is a measure designed to protect the public from unqualified practitioners.

The law does not provide a remedy for the breach of an unenforceable agreement.

The sole nursing home in the county offers a long-term care agreement.The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis.Such a contract is called:

Nanette wanted to purchase a new car and found one she liked at Minson Motors.Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon.These practices involved:

The usual means of enforcing an agreement prohibiting an employee from competing in a described territory for a stated period of time is by injunction.

Rorzex, Inc.entered into a contract with Denzil under the terms of which Denzil would receive $20,000 if he stole trade secrets from the leading competitor of Rorzex.Denzil performed his end of the agreement by delivering the trade secrets.Rorzex now refuses to pay Denzil for his services.Denzil:

Andria, an attorney, has a personal injury case which is set for trial next week.She needs a good doctor to testify on behalf of her client, so she contacts Dr.Wood who agrees to testify on behalf of Andria's client at the trial.In return for Dr.Wood's testimony, Andria agrees to pay Dr.Wood $10,000 if they win the case, and $5,000 if they lose.Dr.Wood agrees.The agreement between Andria and Dr.Wood is unenforceable.

Bargains are illegal if they violate a crime or tort but not if they are merely against public policy.

American courts generally will enforce a gambling agreement.

Identify five exceptions to the general rule that illegal contracts are unenforceable.