Illegal AgreementsIllegal AgreementsChapter 10Chapter 10

Illegal AgreementsIllegal AgreementsThose that involve contracting for an illegal act Those that involve contracting for an illegal act generally are void and unenforceablegenerally are void and unenforceableGambling – usually forbidden or regulated(per state)Gambling – usually forbidden or regulated(per state) Lottery – prize, chance, and considerationLottery – prize, chance, and considerationWager – a bet on the uncertain outcome of an event Wager – a bet on the uncertain outcome of an event (game)(game)Legal FormsLegal Forms CasinosCasinos Pari-mutual bettingPari-mutual betting State run LotteriesState run Lotteries Bingo GamesBingo Games

Illegal AgreementsIllegal Agreements

Agreements to pay usurious interestAgreements to pay usurious interest All states provide that lenders of $ may not All states provide that lenders of $ may not

charge more than a specified maximum rate charge more than a specified maximum rate of interest (usually 18%), or usuryof interest (usually 18%), or usury

If unspecified, lender can’t go above legal rate If unspecified, lender can’t go above legal rate of interest – usually 7-12 percentof interest – usually 7-12 percent

Agreements involving illegal discriminationAgreements involving illegal discrimination May violate the constitution or other statutesMay violate the constitution or other statutes Ex. Subdivision and home buyer agreementEx. Subdivision and home buyer agreement

Illegal AgreementsIllegal Agreements

Agreements that obstruct legal proceduresAgreements that obstruct legal procedures Pay non-expert witness to testifyPay non-expert witness to testify Bribe jurorsBribe jurors Withhold information about illegal activity for Withhold information about illegal activity for

moneymoneyAgreements made without a required competency Agreements made without a required competency licenselicense People in trades, such as plumbers, barbers, People in trades, such as plumbers, barbers,

electricians, or professionals such as lawyers, electricians, or professionals such as lawyers, doctorsdoctors

Illegal AgreementsIllegal Agreements

Agreements that negatively affect Agreements that negatively affect marriagemarriage Pay for citizenshipPay for citizenship Father forbidding daughterFather forbidding daughter

Restraining Fair TradeRestraining Fair Trade

Price fixingPrice fixing Competing firms agree to all sell for the same price Competing firms agree to all sell for the same price Bid rigging – agreement between competitors to have Bid rigging – agreement between competitors to have

the “lowest bid” on a particular jobthe “lowest bid” on a particular job

Resale price maintenanceResale price maintenance Can have a “suggested retail” but can’t agree on a Can have a “suggested retail” but can’t agree on a

price price

Allocation of Markets – competitors divide Allocation of Markets – competitors divide markets and agree not to sell outside (Ex. markets and agree not to sell outside (Ex. Ford dealerships won’t sell outside county)Ford dealerships won’t sell outside county)

Employee agreements not to competeEmployee agreements not to compete LEGAL IF:LEGAL IF:

Time frame is reasonableTime frame is reasonableLimited Geographic area is reasonableLimited Geographic area is reasonableEmployer’s interest is reasonable protected Employer’s interest is reasonable protected ““Trade Secrets”Trade Secrets”

Ex. An agreement not to compete for 2 Ex. An agreement not to compete for 2 years in the city or county where the former years in the city or county where the former employer is located would be enforceableemployer is located would be enforceable

Think Critically…Think Critically…Razer agreed with several published articles that Razer agreed with several published articles that criticized laws prohibiting the production, criticized laws prohibiting the production, possession, and use of marijuana. The authors possession, and use of marijuana. The authors of the articles claimed such legislation was of the articles claimed such legislation was unrealistic and often violated civil rights. Razer unrealistic and often violated civil rights. Razer agreed so heartily that he bought several dozen agreed so heartily that he bought several dozen marijuana plants from a friend. Then he rented a marijuana plants from a friend. Then he rented a patch of land and persuaded the owner, Tom, to patch of land and persuaded the owner, Tom, to accept a share of the proceeds from the sale of accept a share of the proceeds from the sale of his anticipated crops as rent. After harvesting his anticipated crops as rent. After harvesting the first crop, Razer sold most of the product to the first crop, Razer sold most of the product to a local drug dealer for $7,500. Were Razer’s a local drug dealer for $7,500. Were Razer’s agreements legal?agreements legal?

All of his agreements were criminal and therefore VOID.