BMGT380 Final Exam Study Guide Ch 15 Illegality Agreement is illegal b c 1 legislature has declared that type of contract unenforceable void or 2 agreement violates public policy widely shared view about what ideas institutions promote public welfare developed by courts or manifested in sources of law courts must determine whether importance of public policy degree of interference with that policy are sufficiently great to outweigh any interests that favor enforcement of the agreement Courts refuse to give any remedy for breach of an illegal agreement serves the public interest 3 categories of illegal agreements 1 Agreements that violate statutes Agreements declared illegal by statute court need only interpret apply statute Agreements that violate the public policy of the statute no statute specifically states agreement is illegal Agreements to commit a crime Agreements may be legal that promote violations of statutes unenforceable if person is aware of the other s illegal purpose actively helps to accomplish that purpose Agreements to perform an act for which a party isn t properly licensed if statute is regulatory purpose is to protect public from dishonest practitioners agreement is unenforceable if statute is revenue raising measure ex licensing fee agreement will be enforced 2 Agreements that may be in violation of public policy articulated by courts Agreements in restraint of competition if sole purpose was to restrain competition agreement is illegal if restriction was only part of the contract the result may be different Ancillary covenant not to compete noncompetition clause agreement not to engage in a particular competing activity in a specified area for a specific time period after sale of business termination of employment also may include confidentiality nondisclosure agreements nonsolicitation agreements Enforced if 1 clause serves legitimate business purpose 2 restriction is reasonable in time area scope 3 clause doesn t impose an undue hardship Sometimes not enforced if it restricts common calling ex salesperson barber Exculpatory clauses release liability waiver contract provision that releases one party from tort liability Can t protect for wrongdoing greater than negligence can t exclude liability from party who owes duty to public can t enforce if contract frustrates purpose of imposing the duty in question Courts won t enforce if clause is unconscionable contract of adhesion must be voluntary knowing consent written clearly conspicuously Agreements that unreasonably interfere with family relationships considered illegal 3 Contracts of adhesion unconscionable contracts Unconscionability absence of meaningful choice w terms unreasonably advantageous to 1 party procedural unfairness in the bargaining process v substantive unfairness in contract terms Courts refuse to grant equitable remedy of specific performance for breach of contract if they find contract to be oppressively unfair Sect 208 Restatement 3 options refuse to enforce entire agreement refuse to enforce unconscionable provision limit application of the unconscionable clause Adhesion stronger party able to determine terms of contract leaves weaker party w no practical choice but to adhere to the terms may be used to define procedural unconscionability Usually on standardized form offered on take it or leave it basis Contracts refused when containing harsh oppressive terms or terms that adhering party couldn t have been expected to have been aware that he was agreeing to Ch 3 Business the Constitution 2 functions of constitution 1 set up structure of gov t 2 keep gov t from taking certain actions Overview Article I Congress Senate House legislative powers commerce tax spending Presidential veto Congress can override 2 3 senate impeachment treaties also Article II Article II executive power judicial power Articles I II III create system of checks balances III Congress has some control over Supreme Ct Article V constitutional amendments Article VI federal supremacy Evolution of constitution Written book law less important than what officials actually do changing social conditions additional interpretations vague terms phrases Judicial review courts can declare the actions of other gov t bodies unconstitutional Limits on court power constitution stare decisis power struggles w more dem elected bodies ie Congress Constitution limits on gov t regulatory power 1 limits federal leg authority by listing powers Congress can exercise enumerated powers 2 limits state fed power by placing individual checks on each Federal law only constitutional if 1 it is based on an enumerated power of congress and 2 doesn t collide with any independent checks State federal power to regulate State certain powers limited to Congress others concurrent Congress state common concurrent power police power regulate for the public health safety morals welfare Federal Article 1 Sect 8 powers to regulate interstate commerce lay and collect taxes spend for the general welfare Commerce clause expanded to intrastate commerce to affects interstate commerce aff comm doctr Taxing power main purpose is to raise revenue for fed gov t also a regulatory device Spending power must serve general interests be reasonably related to purpose underlying expenditure if expenditure has conditions they must be clear Independent checks on federal state gov ts Incorporation almost all Bill of Rights amendments now apply to states equal protection applies to fed gov t Constitution only applies to gov t action not private disputes Gov t action forces courts to distinguish between gov t behavior private behavior private behavior not state action unless reg unit of gov t is directly responsible for challenged behavior coerced encouraged it in situations where a private entity exercises powers that have been traditionally reserved to the state Means End Test created b c judges must weigh individual rights against social purposes served by restricting laws ends significance of social purpose in order to restrict right v means how effectively challenged law must promote that purpose to be constitutional 3 tests 1 Rational Basis Test action must have reasonable relation to achievement of legitimate purpose 2 Intermediate Scrutiny comes in many forms 3 Full Strict Scrutiny action must be necessary to the fulfillment of a compelling gov t purpose Freedom of Speech 1st amendment Very strict scrutiny marketplace rationale free competition of ideas is best way of
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