Buslaw11 Legality

8/9/2019 Buslaw11 Legality

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1. State the effect of illegality on an

agreement.

2. Illustrate agreements to commit illegal orwrongful acts.

LEGALITY

Chapter Outcomes:

Chapter 11


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3. Cite agreements that are illegal by statute.

4. Describe some agreements that are opposed

to public policy.

5. Explain the consequences of illegal

agreements.

LEGALITYChapter 11

Chapter Outcomes (continued):


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Agreements to Engage inUnlawful Activity

Agreements to Engage in

Criminal Activity

Agreements to Engage in

Tortious Activity

Agreements made Illegal by

Statute

1111--11


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LawLINKS

Chapter 11Chapter 11

Information on the Consumer Credit

Protection Act can be found at

http://www.law.cornell.edu/uscode/15/ch41.

html

The site is maintained by the CornellUniversity Law School Legal Information

Institute.


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1111--11

1. The illegal practice of charging

more than the amount of

interest allowed by law iscalled usury.

Topic Quiz

TRUE

Answer the following true/false questions:


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1111--11

2. All states have made all wagering

agreements illegal.

Topic Quiz

FALSE


Exceptions are horse racing, lotteries,

bingo, and casinos in some states!


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1111--11

3. If a license is required to raise revenue

the lack of a license will always void acontract.

Topic Quiz

FALSE


Not necessarily.


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Agreements Contrary to PublicPolicy

Agreements to Obstruct Justice

Agreements to Interfere with Public

Service

Agreements to Defraud Creditors

Agreements to Escape Liability

Agreements in Restraint of Trade

1111--22


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LawLINKS


Sources of information about employment

law can be found at

http://www.law.indiana.edu/law/

v-lib/labor.html

The site is named Labor and Employment

Law from the WWW Virtual Law Library.


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A Question of EthicsSuppose in example 11-8, the members of theboard of directors of Hawthorne Savings and

Loan Association knew the jobAngelitis had

taken with the Lithuanian Savings and Loan

Company would not in any way realistically hurttheir business. Suppose further that the

Hawthorne board members knew Angelitis had

been out of work for five weeks and that he and

his family had many past due bills that they couldnot pay unless Angelitis remained at Lithuanian.

Legally, the Hawthorne board members can

prevent Angelitis from working for Lithuanian.

However, would it be ethical for them to do so?

Explain.

1111--11


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1111--22

1. Exculpatory clauses are generally

favored by the law.

Topic Quiz

FALSE


No, because they generally permit less

than acceptable standards.


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1111--22

2. A restraint of trade is a

limitation on the full exercise

of doing business with others.

Topic Quiz

TRUE



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1111--22

3. Restrictive covenants are never upheld

by the courts.

Topic Quiz

FALSE


They will be upheld if reasonable in

time and geographic area.


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Consequences of Illegality

Illegality in Entire Agreementsand Divisible Contracts

In Pari Delicto

1111--33


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1111--33

1. A contract must violate criminal law to

be invalid.

Topic Quiz

FALSE


Agreements that do not violate criminal

law may also be invalid.


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1111--33

2. If a contract is partly legal and partly

illegal, the entire contract will always bestruck down by the courts.

Topic Quiz

FALSE


Not if it can be separated.


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1111--33

3. When the parties to an illegal

contract are not in paridelicto,

relief will often be granted if

sought by the more innocent

party.

Topic Quiz

TRUE



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1111--11 An agreement might have offer, acceptance,

mutual assent, competent parties, and

consideration and still be invalid if the

objective of the agreement is to do something

that is illegal.

Agreements to commit crimes or torts are

illegal and void.

SUMMARY

Some agreements are made illegal by statute

even though the activities are neither crimes

nor torts.


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1111--22 Public policy is a general legal

principle stating that no one should

be allowed to do anything that hurts

the public at large.

SUMMARY(continued)

Contracts that involve illegal

agreements are invalid.

1111--33


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Key TermsAgreements in restraint of trade blue laws

conspiracy exculpatory clause

in pari delicto local option

public policy restraint of trade

restrictive covenants usury


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Investigating on the Internet


Sources of information about contract law

can be accessed at

http://www.law.indiana.edu/law/v-

lib/contracts.html

As a research assignment, access thiswebsite and report those sources of

information that might concern illegal

contracts.


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End of Presentation

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