Deck 10: Illegal Agreements

Question 1

Chuck Denson owned a car dealership, ABCD Auto Inc. that was licensed to sell cars in Tarrant and Wood counties but not in Dallas County. Through its agent, Otis Chapman, Dallas County Credit Union and Denson agreed that Denson would find cars for the credit union's customers that the credit union would finance. The activities were all conducted in Dallas County. The profits would be split one-third among each of ABCD, Denson, and Chapman. After making sales, Denson sued, alleging that Chapman had understated the sale prices reducing the share paid to ABCD and Denson. The credit union said the agreement was void for illegality because ABCD was not licensed. Was the agreement void?

Answer 1

The agreement was void, as the doctrine of illegality does not apply here because the defense of affirmation is only applicable when the contract cannot be legally performed. The company had no legal liability to perform the business as the automobile dealer from any of the location in Dallas County.
There was no evidence and the decision would have been in the favor of N, they can be termed as doing the breach of fiduciary duty as the tortfeasor, but is affirmed in all other respects.

Question 2

Why are noncompete contracts that have restrictions that go further or longer than necessary to protect the buyer of the business unlawful?

Answer 2

Non-compete contracts that are restricted and that go longer than needed to protect the business buyer are unlawful because they put a burden on the seller.
They deprive the community of business and society in general and benefit the seller's activities and thus are harmful for the consumers.

Question 3

Seven valuable paintings were stolen from the home of Michael Bakwin, including a still life by Paul Cezanne. Sometime later, while cleaning out the loft where a client had been living, attorney Robert Mardirosian found the paintings. Instead of reporting his discovery to the police, Mardirosian shipped the paintings out of the country and sought to have the Cezanne insured in London through a third party. The insurer contacted authorities, who enabled Bakwin to contact Mardirosian's agent. Bakwin reluctantly agreed to convey six of the paintings to the anonymous holder in exchange for the return of the Cezanne. The agreement was executed and the Cezanne was returned. Mardirosian was later discovered and apprehended when he attempted to sell the remaining six paintings. He was convicted of possessing stolen paintings. On appeal, Mardirosian argued that in light of his contract with Bakwin to exchange the paintings, the government could not prove the paintings were "stolen" after a certain date. Did the contract extinguish Mardirosian's offense of possessing stolen paintings?

Answer 3

Contracts contrary to public policy are those contracts which are against the public policy and such contracts are not enforceable.A contract may be contrary to public policy if it restraints liberty or legal right, creates injustice or obstructs justice, or violates a statute; such contract shall be void and unenforceable. Such contract is void even if it does not actually obstruct justice and only tends to do so. An agreement made with thief in case of theft, that thief will not be prosecuted if he returns the stolen goods also obstructs administration of justice and hence void.Facts: There was a theft at person B's home and seven paintings were stolen, stolen paintings included a still life by painter P. Stolen paintings were found by attorney M after sometime in the loft of client's home. M did not tall police about the paintings and shipped them to London instead, where M tried to get P insured by a third party. The insurer informed the authorities, as a result of which B contacted M's agent. B reluctantly agreed to let go six other paintings if P was returned to him. Agreement was made and B got back P. M was later arrested when he tried to sell remaining paintings. M was charged with possession of stolen paintings. M argued that he cannot be charged for stealing after a certain date as he made a contract with b.Outcome: No, the contract did not extinguish person M's offense of having possession of stolen paintings. M will still be held guilty of having possession of stolen paintings because any contract made with thief that he will not be prosecuted if he returns the stolen goods, obstructs the course of justice and is contrary to public policy. All such contracts are void and not enforceable so agreement between person M and person B is void and not enforceable; hence M will still be guilty of possessing stolen paintings.

Question 4

Why are most statutes making it illegal to operate certain types of businesses or professions without a license enacted?

Question 5

CIBER was competing on a bid to provide software services to the District of Columbia government and retained the services of CapitalKeys to help win the contract. CIBER and CapitalKeys entered an agreement that stipulated, among other things, that in the event CIBER was awarded the contract, CapitalKeys would be paid a 3 percent commission on the value of the contract. CIBER procured the contract worth $17,000,000, and CapitalKeys invoiced CIBER for $323,785 pursuant to their agreement. After CIBER refused to pay, CapitalKeys sued for breach of contract. CIBER responded that because the 3 percent fee was a contingent fee for the purpose of securing a public contract, that the clause was void and in violation of public policy. Were they correct?

Question 6

If Tom contracts to sell cigarettes to Mary and her friends, who are minors, can he recover on the contract? Why not?

Question 7

The town of Lunenburg asked for bids on a multimillion-dollar construction project to be financed by the state. State law required the town to publish a notice for bids in a newspaper of general circulation in the locality. Lunenburg failed to advertise for bids in a local newspaper. Baltazar Contractors Inc. was the low bidder, and Lunenburg signed a contract with the company. The state Department of Environmental Protection questioned the bid award and told Lunenburg its state financing was in jeopardy. Lunenburg told Baltazar it was ending the contract. It re-advertised for bids, this time publishing a notice in the local newspaper. Baltazar bid again, but MDR Construction Co. Inc., who had not bid the first time, was the low bidder and got the contract. Baltazar sued Lunenburg for damages. Should Baltazar recover?

Question 8

Can a contract provision in which a party promises to never marry be enforced?

Question 9

Yancey Brothers Co. (Yancey) employed Edward Murphree as a heavy equipment salesman. His employment contract prohibited him from attempting to solicit any customers procured or serviced by him for two years after leaving Yancey. Murphree used a thumb drive to copy company files from his company laptop. He resigned and took a job with Flint Equipment Co. (Flint), a competitor selling the same equipment in the same territory. Murphree contacted his former Yancey clients and submitted heavy equipment bids to some. Yancey sued Murphree and Flint, alleging Murphree was in violation of his employment contract. Should the contract's nonsolicitation provision be enforced?

Question 10

Under what circumstances will a contract that may obstruct our legal processes be void?

Question 11

Does a contract that is void for illegality necessarily involve the commission of a crime?

Question 12

Give three examples of contracts that injure public service.

Question 13

Julianna Robertson's will set up a trust that left her home to her husband, Lynn, for his lifetime or until he remarried or allowed "any female companion to live with him who is not a blood relative." During the probate of the will, the court held that Lynn had a life estate in the property and that the provision regarding his remarriage was an invalid restraint on marriage. James Nye, Julianna's son and the executor, appealed. Was the provision invalid?

Question 14

With regard to illegality of a contract, what is the difference between a divisible and an indivisible contract?

Question 15

Pines Grazing Association Inc. (Pines) contracted to sell a ranch to J. C. Investments (JC). Before the sale, the parties discovered that 80 acres they thought had been included in the ranch were not. They went ahead with the sale while Pines tried to buy the 80 acres from Lemhi County. The county had to sell the property at public auction. Pines sent Fred Snook, and JC sent Scott Karterman to the auction to buy the acreage. They met at the auction, and JC agreed to pay Pines $20,000 if it would not bid on the property so they would not bid against each other and drive up the price. Pines did not bid, and JC bought the property for much less than it would have had to pay Pines. JC did not pay Pines the $20,000, and in the resulting lawsuit JC argued that the agreement not to bid was illegal and therefore unenforceable. Should the court enforce the agreement to pay Pines $20,000?

Question 16

What constitutes a usurious contract?

Question 17

Youcheng Wu, a married man, entered into a relationship with Jian Xu, a single woman. Xu claimed that Wu promised to divorce his wife and marry her. Wu denied this, but did sign a letter drafted by Xu's attorney in which he apologized for hurting her and promised to pay $500,000 if Xu would refrain from disclosing the relationship to Wu's wife. After paying approximately $47,000, Wu stopped making payments. Xu threatened to sue for the remaining amount. Wu responded by filing suit for a declaratory judgment that the letter was an unenforceable contract and against public policy. How should the court rule in this case?

Question 18

Why is it that the types of transactions one observes being undertaken on Sunday do not necessarily indicate restrictions imposed by Sunday acts?