Legality Agreements that Violate Statutes Civil Criminal Statutes

Legality

Agreements that Violate Statutes • Civil & Criminal Statutes – Agreements to commit a crime/tort are illegal • Usury Statutes – State sets a max interest rate • Interest – Fee the borrower pays to the lender for using the money • Usury – Charging too high of an interest rate

• Truth in Lending Act – Lender is required to make clear the annual percentage rate (APR). • Gambling Statutes – Discuss state laws • Lottery vs Poker • Sunday Statutes – Illegal to perform certain contracts on Sunday

Licensing Statutes • License - legal document stating that the holder has permission from the proper authorities to carry a certain trade or profession • (Example) - If license is only to raise revenue (not to show competence) contracts made are valid not void (Person w/out license subject to arrest )

Agreements Contrary to Public Policy • Agreement in unreasonable restraint of trade Types:

Agreements Contrary to Public Policy 1) Outright contracts not to compete - seller of a business may sign a restrictive covenant which would be upheld by the court • Restrictive covenant - agreement not to compete in a region for a period of time *Only legal for a short period of time and small geographic region

Agreements Contrary to Public Policy 2) Price Fixing - competitors agree on certain price ranges within which they will sell their on prices • Competitors may agree to sell a product at a particular price • Manufacturers may set a price at which a product must be sold • Price fixing is NOT enforced by the court

Agreements Contrary to Public Policy 3) Agreements to defeat competitive bidding • Bid - offer to buy or sell goods or services at a stated price • Law often requires govt to contract public works or buy goods or services through competitive bidding • Agreement to bid above a certain price is illegal

Agreements Contrary to Public Policy 4) Agreements to obstruct justice - any agreement to interfere with administration of justice (Example - protect someone from arrest; giving false testimony; bribing)

Agreements Contrary to Public Policy 5) Agreements Inducing Breach of Duty or Fraud - contracts that try to influence public officials 6) Agreements Interfering with Marriage contracts that discourage, harm, or interfere with good family relations

Effect of Illegality • If the legal part can be separated from illegal part, the court will separate • If the legal part can’t be separated from illegal part, the contract is void