Chapter 10 Legal Purpose and Proper Form 11/13/2018 Chapter 10 Legal Purpose and Proper Form 10-1 Illegal Agreements 10-2 The Statute of Frauds Chapter 10 LAW

10-1 Illegal Agreements GOALS Identify various forms of unenforceable illegal agreements Specify agreements that, although illegal, the courts will enforce Chapter 10

WHICH AGREEMENTS ARE ILLEGAL? Illegal lotteries Agreements to pay usurious interest Agreements involving illegal discrimination Agreements that obstruct legal procedures Agreements made without a required competency license Agreements that affect marriage negatively Continued on the next slide Chapter 10

WHICH AGREEMENTS ARE ILLEGAL? Agreements that restrain trade unreasonably Price fixing Resale price maintenance Allocation of markets Agreements not to compete Chapter 10

Name four of the eight illegal agreements discussed in this section. Chapter 10

WHEN WILL THE COURTS ENFORCE ILLEGAL AGREEMENTS? Protected victims The excusably ignorant Rescission prior to illegal act Divisible contracts Chapter 10

Under what circumstances will the courts enforce illegal agreements? Chapter 10

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

WHY HAVE A STATUTE OF FRAUDS? Contracts within the Statute of Frauds Executed contracts Executory contracts Requirements of the writing Statute of Frauds requirements UCC requirements Special rules for signatures Chapter 10

Name the six essential elements in a writing required by the most demanding Statutes of Frauds standards. Chapter 10

TYPES OF CONTRACTS WITHIN THE STATUTE OF FRAUDS Contract for the sale of goods for $500 or more Contract to sell an interest in real property Contracts that require more than one year to complete Continued on the next slide Chapter 10

TYPES OF CONTRACTS WITHIN THE STATUTE OF FRAUDS Contract to pay a debt or answer for another’s debt or the debts of an estate Exception—main purpose rule Contract for which the consideration is marriage Chapter 10

Name the five types of executory contracts that require a writing. Chapter 10

HOW ARE CONTRACTS INTERPRETED? Acknowledgement of final agreement Specific rules of interpretation Analysis Conflicting terms Words Ambiguities Implied reasonableness Parol evidence rule Exceptions to the parol evidence rule Chapter 10

Explain the parol evidence rule. Chapter 10

PREVENT LEGAL DIFFICULTIES In making contracts . . . Deal only with persons who are reputable and properly licensed when contracting for professional or skilled services. Do not rush into a decision. Take time to review and understand the advantages and disadvantages of the contract. Legitimate proposals usually will survive a delay. Continued on the next slide Chapter 10

PREVENT LEGAL DIFFICULTIES If the contract is complex or involves much time or money, put it in writing even when the Statute of Frauds does not require this. Try to anticipate and provide for all possible problems. If needed, obtain the assistance of a qualified lawyer. If a prepared contract is presented to you for your signature read it carefully, especially if it is a contract of adhesion. If the contract involves a large sum of money, or if it is complex, have your lawyer review it before you sign. Continued on the next slide Chapter 10

PREVENT LEGAL DIFFICULTIES Insist that all terms of the contract that you do not understand be defined and explained. Make necessary changes, or reject the entire contract. Make sure that all changes are written into a contract on all copies as well as on the original, and that all changes are initialed by both parties. Retain a copy with the other party’s signature on it. Be sure all desired terms are expressed in writing or included by specific reference to any other relevant document(s). Continued on the next slide Chapter 10

PREVENT LEGAL DIFFICULTIES When any payments have been made in cash, be sure to get a receipt if payment is not acknowledged in the contract. Chapter 10