1. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11 Slide 1 Legality of Contracts 11-1 11-1Which Agreements Are Illegal? 11-2 11-2Enforceability of Illegal Agreements CHAPTER 11 Lessons

2. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11 Slide 2 Which Agreements are Illegal? Describe general features of contracts which make them illegal Describe particular illegal contracts LESSON 11-1 GOALS

3. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 3 ILLEGAL AGREEMENTS Contracts made illegal by specific statute Agreements that obstruct legal procedures Agreements made without a required competency license Agreements that affect marriage negatively Agreements that restrain trade unreasonably

4. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 4 CONTRACTS MADE ILLEGAL BY SPECIFIC STATUTE Illegal gambling Agreements to pay usurious interest Agreements involving illegal discrimination

5. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 5 AGREEMENTS THAT OBSTRUCT LEGAL PROCEDURES Agreements that delay or prevent justice are void. Examples include Promises to pay non-expert witnesses in a trial to testify or pay for false testimony Promises to bribe jurors Promises to refrain from informing on or prosecuting an alleged crime in exchange for money or other valuable consideration

6. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 6 AGREEMENTS MADE WITHOUT A REQUIRED COMPETENCY LICENSE All states require that persons in certain occupations and businesses pass exams and receive a license to ensure that they are competent. Persons who lack the required competency license may not enforce the contracts they make in doing the regulated work.

7. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 7 AGREEMENTS THAT AFFECT MARRIAGE NEGATIVELY The law encourages marriage and family life by making agreements that harm or interfere with marriage unenforceable.

8. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 8 AGREEMENTS THAT RESTRAIN TRADE UNREASONABLY Price fixing Resale price maintenance Allocation of markets Covenants not to compete

9. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11 Slide 9 Enforceability of Illegal Agreements Describe how courts help parties to illegal contracts under the common law Describe how courts help parties to illegal contracts under the UCC LESSON 11-2 GOALS

10. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 10 HOW DO COURTS TREAT PARTIES TO ILLEGAL CONTRACTS? Generally, courts treat illegal agreements in two different ways depending upon whether they are governed by the common law or the UCC.

11. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 11 COMMON LAW Protected victims The excusably ignorant Rescission before the illegal act Divisible contracts

12. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 11Slide 12 THE UCC Unconscionability Procedural unconscionability Substantive unconscionability Remedies