Chapter 18 - Public Policy

Question 1

Violations of Law or Public Policy

Answer 1

may be void if contract is illegal or against a public policy @ time of contract formation

Question 2

Balancing Test

Answer 2

Whether the court should void the contract based on public policy

• will need to balance importance of enforcing the contract vs IMP public policy

not always necessary, esp when the statute specifically says the contract is illegal

Question 3

importance of enforcing the contract

Answer 3

1. expectations of parties –> were they fair and clear?
2. Losses of the parties –> if contract cancelled, who loses more, is one side going to be hurt more than the other?

Question 4

importance of furthering public policy

Answer 4

1. is there any special public interest that is affected by the outcome?
2. how strong is the public policy, how imp is it to follow the rules or guidelines set?
3. effect on public policy, if the contract is cancelled or part of it is voided, does that help public interest?
4. seriousness of misconduct, how bad is it if one party didn’t act honestly or fairly in the contract?

Question 5

CLEARLY illegal contracts

Answer 5

when it is clearly illegal, it is void, court DOES NOT need a balancing test

Question 6

de minimis legal violations

Answer 6

if the contract asks someone to do something small that’s against the law, like briefly parking in a no-parking zone to unload furniture,
if this is the only issue in the valid contract, its usually not that big of a deal

benefit of enforcing the contract outweighs the minor legal violation

Question 7

availability of restitution

Answer 7

1. disproportionate forfeiture
   (if one party would lose a lot more than the other by cancelling the contract, they might get some money back)
2. Excusable ignorance
   (if someone did not know they were breaking the law, like buying stocks without knowing the rules, they might get some money back)
3. not equally wrong
   (if one side is more at fault than the other in breaking the law, the less guilty side might get some money back)
4. withdrawal
   (if someone backed out of a deal but still deserves some money for what they did before leaving, they might get restitution)

Question 8

licensing laws

Answer 8

when a contract breaks a law like providing services without a license courts balance two things

1. public policy importance
   (how important it is to follow the law meant to protect the public, like licensing laws for safety or quality?

2 contract enforcement interest
(is it fair to enforce the contract even if it breaks the law, or should the laws purpose be more important?)

Courts decide based on whether enforcing the contract helps or harms the public’s well-being compared to the importance of following the law.

Question 9

NON COMPETE AGREEMENTS

it violates public policy if ..

use this restraint test - to see balancing test

Answer 9

Use the extent of restraint test - to see balancing test

Courts consider three types

Scope
Limits on type of work the party can engage in

Geography
Geographical limit on where they may work

Time
Restraint on period of time that party is limited

Question 10

do employers have a interest in protecting client/customer list, trade secrets?

Answer 10

YES

they have strong interest in protecting client/customer lists and trade secrets

however they can not just impost whatever restrictions they want on their employees or buyers, these restrictions must be reasonable and fair,

when you work for someone, you owe them loyalty, u have to keep info confidential