Docstoc

continued

Document Sample
continued Powered By Docstoc
					CHAPTER       10
Legal Purpose
and Proper Form
10-1 Illegal Agreements
10-2 The Statute of Frauds




                             Law for Business and Personal Use
                                                  Huber Notes
FOCUS—What do you think…
 What types of contracts that society,
  through its courts of law, should not
  enforce even though all the essential
  elements for an enforceable contract
  are present.



Chapter 10                 Law for Business and Personal Use
Slide 2                                          Huber Notes
Assignment – Legal Research
 Complete Vocabulary…Page 184 (Answers
  Only)
 Legal Research – Who Keeps the Ring
   Assume you are about to get engaged. Research the
    issue of who gets to keep the ring if the engagement
    is called off. What rules are utilized to make the
    determination?
   Find out if the rules have stayed the same for many
    years, or if they changed frequently.
 All DUE ___________________ Day of Test!

  Chapter 10                         Law for Business and Personal Use
  Slide 3                                                  Huber Notes
      WHICH AGREEMENTS
      ARE ILLEGAL?
   Illegal lotteries
     Lottery
          3 elements
                 Prize - something of value for one or more winners
                 Chance – the winner determined solely by luck
                 Consideration – a payment to participate
     Wager
          To bet with an uncertain outcome of an event
                 Such as a football game (picking numbers)
                 Basketball (March Madness)
     Most states have legalized various forms of gambling - under regulated conditions:
          Casinos –
                 Gambling Laws in the U.S. – see website for better understanding
          Pari-mutual betting
                 Betting on horse or dog races
          State-run lotteries
                 Often with millions in the jackpot…lotto tickets (WI or IL)
          Bingo games and pull-tab betting
                 Usually permittable in most states set up by charitable events, churches or educational projects.



     Chapter 10                                                                 Law for Business and Personal Use
     Slide 4                                                                                          Huber Notes
                                                            (continued)
  WHICH AGREEMENTS
  ARE ILLEGAL?
 Agreements to pay usurious interest
   States have to follow rules about how much they can
    charge for interest rates….no more than 18%
   Legal rate of interest – rate to be paid
   Small loan rate of interest – up to 36% a year
        On a small loan – up to $2000
 Agreements involving illegal discrimination
   Example:
        An agreement between a hotel chain and a local manager
         not to accept a particular race to as a guest.

  Chapter 10                                Law for Business and Personal Use
  Slide 5                                                         Huber Notes
                                                                 (continued)
  WHICH AGREEMENTS
  ARE ILLEGAL?
 Agreements that obstruct legal procedures
    Pay non-expert witnesses in a trial to testify or pay for false
     testimony
    Bribe jurors
    Refrain from informing on or prosecuting an alleged crime in
     exchange for money or other valuable consideration –
     compounding a crime.
 Agreements made without a required competency license
    Competency license – to ensure that they can perform adequately.
        Teachers, lawyers, barbers, doctors, etc.
    Revenue License – purpose to raise revenue rather to protect the
     public, contracts made by the unlicensed person are valid.

 Chapter 10                                      Law for Business and Personal Use
 Slide 6                                                               Huber Notes
                                                          (continued)
WHICH AGREEMENTS
ARE ILLEGAL?
 Agreements that affect marriage negatively
      Mail order brides…no illegal
      You cannot pay someone if not a U.S. citizen to become
       your husband or wife.
 Agreements that restrain trade unreasonably
      Price fixing – crime under federal law
      Price rigging – form of price fixing
      Resale price maintenance – when manufacturers want
       retailers to sell product at a particular price
      Allocation of markets – price fixing in divided
       markets…outside the U.S.
 Agreements not to compete
Chapter 10                                Law for Business and Personal Use
Slide 7                                                         Huber Notes
                                                                    (continued)
WHICH AGREEMENTS
ARE ILLEGAL?
 Agreements not to compete
      Price fixing and market allocation are agreements not to
       compete….
      But, 1 type of agreement that is ENFORCEABLE is:
          When a person is hired they may agree that they will not
           compete with their former employer after the employment is
           terminated.
          These agreements become illegal if they are unreasonable:
              Time period for the limitation
              Geographic area to which the limitation applies
              Employer’s interest protected by the limitation
          Example – an agreement not to compete for 20 years would be
           illegal!


Chapter 10                                          Law for Business and Personal Use
Slide 8                                                                   Huber Notes
       Name four of the eight illegal
       agreements discussed in this
       section.




Chapter 10                     Law for Business and Personal Use
Slide 9                                              Huber Notes
WHEN WILL THE COURTS ENFORCE
ILLEGAL AGREEMENTS?
 Protected victims
      blue-sky laws – prohibit sales of worthless
      stocks and bonds
 The excusably ignorant
     These people are excusably ignorant who:
         Does not know the contract is illegal, but
         The other party knows the transaction is illegal,
          and
         The illegality is minor
Chapter 10                             Law for Business and Personal Use
Slide 10                                                     Huber Notes
                                                                   (continued)
WHEN WILL THE COURTS ENFORCE
ILLEGAL AGREEMENTS?
 Rescission prior to illegal act
      If a party rescinds before illegal act occurs.
          Example – Student A pays Student B to scratch Teachers car.
           Student A is feeling guilty and pulls the deal.
 Divisible contracts
      Divisible means that separate consideration is given for the
       legal and illegal parts of the contract.
      Unconscionability
          Occurs when there is a grossly unfair contract that parties
           under ordinary circumstances would not accept.
          The UCC makes unconscionable contracts for the sale of
           goods subject to the rules for illegality. Such contracts have 2
           elements:
              Procedural – how the contract is created
              Substantive – unfair terms in the agreement
Chapter 10                                         Law for Business and Personal Use
Slide 11                                                                 Huber Notes
       Under what circumstances will the
       courts enforce illegal agreements?




Chapter 10                    Law for Business and Personal Use
Slide 12                                            Huber Notes
10-2 The Statute of Frauds
GOALS
 Explain why the Statute of Frauds is
  necessary and what it requires
 Identify the main instances when the
  Statute of Frauds requires a writing
 Understand the rules of contract
  interpretation
Chapter 10                Law for Business and Personal Use
Slide 13                                        Huber Notes
FOCUS
 Must all contracts be in writing?
 The Guts of a Contract (Contract Law)
     Print Out (Due Tomorrow)




Chapter 10                  Law for Business and Personal Use
Slide 14                                          Huber Notes
What is “Statue of Frauds”
 The "statute of frauds" - also commonly abbreviated
  as "SOF" - is a rule of law that requires certain kinds
  of contracts to be in writing (not oral or "verbal") and
  that they be signed by all the parties to the deal in
  order to be binding. The types of contracts and rules
  can vary by jurisdication.
 The "statute of frauds" - also commonly abbreviated
  as "SOF" - is a rule of law that requires certain kinds
  of contracts to be in writing (not oral or "verbal") and
  that they be signed by all the parties to the deal in
  order to be binding. The types of contracts and rules
  can vary by jurisdication
Chapter 10                           Law for Business and Personal Use
Slide 15                                                   Huber Notes
      WHY HAVE A STATUTE

              FRAUDS?
      OF within the Statute of Frauds
    Contracts
       Executed contracts – is one that has been fully performed
       Executory contracts – is one that has NOT been fully performed
            Quasi-contract – exists when some element of an enforceable contract is missing (such as a
             signed writing), yet courts award money to prevent the unjust enrichment of one party.
   Requirements of the writing
       Statute of Frauds requirements says
        1.   Names of the parties
        2.   Subject matter description
        3.   Price
        4.   Quantity
        5.   Signature
        6.   Other essential terms
       UCC requirements says
            The quanitity of goods
            That a contract has been created between the parties
       Special rules for signatures
            On certain documents it can be engraved, stamped, written (signature), or printed.



     Chapter 10                                                     Law for Business and Personal Use
     Slide 16                                                                             Huber Notes
       Name the six essential elements
       in a writing required by the most
       demanding Statutes of Frauds
       standards.



Chapter 10                    Law for Business and Personal Use
Slide 17                                            Huber Notes
TYPES OF Executor CONTRACTS
WITHIN THE STATUTE OF
FRAUDS
1. Contract for the sale of goods for $500
   or more
2. Contract to sell an interest in real
   property
3. Contracts that require more than one
   year to complete


Chapter 10                 Law for Business and Personal Use
Slide 18                                         Huber Notes
                                              (continued)
TYPES OF CONTRACTS WITHIN
THE STATUTE OF FRAUDS
4. Contract to pay a debt or answer for
   another’s debt
      Exception—main purpose rule
5. Contract for which the consideration is
   marriage



Chapter 10                    Law for Business and Personal Use
Slide 19                                            Huber Notes
       Name the five types of executory
       contracts that require a writing.




Chapter 10                    Law for Business and Personal Use
Slide 20                                            Huber Notes
   HOW ARE CONTRACTS
   INTERPRETED?
 Integration clause
    Establishes that only those provisions contained in the written
     agreement between the parties of which the integration clause
     is a part shall have any force or effect on the parties, and
     excludes all other provisions not contained within the written
     agreement.
 Specific rules of interpretation
      Analysis
      Conflicting terms                             Example:
      Words                                        Real Estate
      Authors of ambiguity                         Mortgages
        Contracts of Adhesion
            a contract that heavily restricts one party while leaving the other free
             (as some standard form printed contracts); implies inequality in
             bargaining power
    Implied reasonableness
  Chapter 10                                             Law for Business and Personal Use
  Slide 21                                                                     Huber Notes
   HOW ARE CONTRACTS
   INTERPRETED?
 Parol evidence rule
    a rule that oral evidence cannot be used to contradict the terms of
     a written contract
        rule of evidence - (law) a rule of law whereby any alleged matter of fact
         that is submitted for investigation at a judicial trial is established or
         disproved
 Exception to the parol evidence rule
   1. To clarify ambiguities in the written agreement
   2. If the written contract was not intended to be a complete agreement
   3. If a condition necessary to the existence of the contract never
      occurred
   4. If fraud, forgery, illegality, mistake, or misrepresentation occurred
   5. To show the parties reached another agreement or terminated the
      contract under consideration after executing the written contract
   6. To show that the contract is voidable because a party lacked
      contractual capacity
  Chapter 10                                       Law for Business and Personal Use
  Slide 22                                                               Huber Notes
   Parol of Evidence…
 The parol evidence rule is a common trap for
  consumers. For example:
    Health club contracts. You enroll in a health club, and the
     salesperson tells you that the contract can be cancelled. You
     later decide you would like to cancel, but the written contract
     provides that it is non-cancellable. The oral promises of the
     salesperson are generally non-enforceable.
    Auto sales agreements. You purchase a used car, and the
     salesperson tells you it is "good as new." But the contract
     provides that the sale is As Is. Again, in most circumstances the
     written contract controls.
    Timeshares. While in certain jurisdictions, and in certain
     circumstances, a consumer may have a right of rescission,
     some people attend real estate sales presentations at which
     they may feel pressured into immediately signing binding
     contracts.
  Chapter 10                                  Law for Business and Personal Use
  Slide 23                                                          Huber Notes
       Explain the parol evidence rule.




Chapter 10                    Law for Business and Personal Use
Slide 24                                            Huber Notes
Lets Review…
1. Enforceable contracts can often be created
   without a writing. T or F
2. Ambiguity in the terms of a written contract will be
   interpreted against the author. T or F
3. Where there are contractual obligations
   unperformed, the contract is called_____?
   Executory or Executed
4. Parol statements can be admitted to prove which
   of the following:
  a.   Fraud
  b.   Illegality
  c.   A conflicting agreement existed before the signing
  d.   A and b
  Chapter 10                           Law for Business and Personal Use
  Slide 25                                                   Huber Notes
Lets Review…
1.    Contracts in which one person pays another to commit a felony are
      unenforceable. T or F
2.    Charging interest at a rate higher than allowed by law is called
     a.   Compounding a crime
     b.   Wagering
     c.   Excessive interest
     d.   Usury
3.    Typically, illegal contracts are held by the courts to be _______ and
      unenforceable.
     a.   Valid
     b.   Voidable
     c.   Void
4.    A lottery has 3 elements. T or F
5.    Restitution is
     a.   The enforcement of an agreement
     b.   Getting back your consideration in a contract


     Chapter 10                                       Law for Business and Personal Use
     Slide 26                                                               Huber Notes
Lets Review…
1. If you agreed to pay a non-expert witness to
   make sure that she testified for you at a trial, this
   agreement would be unenforceable? T or F
2. A party to an illegal contract may be able to
   either enforce the agreement or obtain restitution
   if he or she
   a.   Is excusably ignorant
   b.   Is a protected victim
   c.   Rescinds before the illegal act occurs
   d.   All of the above

   Chapter 10                            Law for Business and Personal Use
   Slide 27                                                    Huber Notes
Test Tomorrow
 Open Note Only…




Chapter 10          Law for Business and Personal Use
Slide 28                                  Huber Notes

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:2
posted:1/16/2013
language:English
pages:28