Quiz 16: Legality and Public Policy

Business

In pari delicto refers to in equal fault, e.g. means both parties at equally at fault for committing to an illegal agreement. For example, a woman contracting a hitman for killing her husband will be equally guilty as the hitman. Both the woman and hitman are guilty of murder.

Refer to the case Iwen v U.S. West Direct (977 P2d 989). Facts 1) Plaintiff is an attorney from Montana. Defendant is an advertising company with yellow page advertisement and 800 numbers. Plaintiff contacted defendant for these services. The contract with defendant contained an arbitration clause. 2) Plaintiff was unhappy with the advertisement, defendant's representatives agreed that the ad was faulty, and urged for modifications. Negotiations to remedy the ad failed. Plaintiff refused to pay for ad until agreement was reached. 3) After months of endless conversations with defendant's representatives and still unable to resolve the faulty ad, plaintiff brought suit for negligence and infliction of emotional distress. 4) District court ordered for arbitration. Plaintiff appealed Relevant Terms and Cases Arbitration clause a provision in a contract that states for disputes to be settled out of court by a specified arbitrator. If a party brings disputes towards legal system, judge will usually uphold and order arbitration. However, the arbitration clause itself can be challenged in court. Unconscionable Clause a clause in a contract that is highly unfair to one party while benefiting the other that makes it unenforceable. Contracts of Adhesion are contracts made on a standardized form usually from a large company. The party with the weaker or no bargaining power is forced to take the contract on a Take-it-or-leave-it basis; either take the contract or get nothing at all. If the contract is deemed very unfair to one party it may be deemed unconscionable and may not be enforced. Opinion Plaintiff claimed that the arbitration clause with defendant was an unconscionable contract of adhesion and should not be enforced. The court agreed reading the arbitration clause states that disputes from customers must be arbitrated whereas the defendant was free to use the court system. Hence, it gave unfair advantage by limiting plaintiff sources of remedy while expanding defendants'. Hence, the Montana Supreme Court reversed the decision.

Refer to the case Nemard Construction Corp. v Deafeamkpor (863 NY S2d 546). Facts 1) Plaintiff is a construction company that did construction work for defendant in New York City. Defendant failed to pay the entire balance on work done by plaintiff. Plaintiff sued for damages. Jury found for plaintiff 2) Defendant motioned to dismiss claim and set aside jury verdict, on grounds that plaintiff does not have a contractor's licensed as required by under Code of City of NY ("The Code" see below) and hence is not owed pay. Relevant Terms, Law, and Cases Code of City of NY § 20-385-402 Home Improvement Business concerns the regulation of home improvement businesses in New York City, it requires in most cases for constructors to have proper license. Public Policy Argument (contracts) is an argument that the contract or certain provisions of it is against public policy and shouldn't be enforced. Opinion The court applied the public policy argument that the Code was enacted to protect homeowners from fraudulent practices by construction companies. Hence, the contract can't be enforced even if it is unfair to the plaintiff. Court granted motion to dismiss and judgment notwithstanding verdict to defendant.

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