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Mizzou MANGMT 3540 - Chapter 10 : capacity and legality and Ch. 11 Statute of Frauds

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MANGMT 3540 1st Edition Lecture 12 Outline of Last Lecture I. Capacity to Contract: Levels of CompetenceII. DisaffirmanceIII. RatificationIV. Liability for necessariesV. Minors VI. Intoxicated PersonsVII. Incompetent Persons Outline of Current Lecture VIII. Illegal AgreementsIX. Contracts Against public policyX. Results of illegality or violations of public policyXI. IntroductionXII. Sale of Interest in Land XIII. Performance Beyond One YearCurrent LectureI. Illegal AgreementsA. Definedi. An agreement whose purpose or performance is illegalThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.B. Five Types of Illegal Agreements i. Violation of usury laws (laws which set a maximum interest rate on loans or credits)1. Typically cannot collect interest2. Some states: can’t collect on entire contractii. Gambling laws1. Missouri: Sec. 434.010: a gambling contract is void, but the loser has a short time to sue to recover losses: three-month statute of limitationsiii. Blue laws (Sabbath laws) – certain contracts prohibited on Sundays1. History2. Contracts for food and medicine were usually exceptions3. Now very few contracts are illegal on Sundayiv. Contract by unlicensed professionals 1. I.e. a “quack” practicing medicine2. For licensed professions from surgery to cutting hair a license is requiredv. Contract to perform illegal acts1. Contracts to sell or transport contraband, such as drugs2. Hiring a hit man to dispose of your wife 3. Contracts for sexual servicesII. Contracts Against public policyA. Exculpatory contractsi. Attempt to escape liability (culpability) of the party at faultii. Employers generally may not exempt themselves from liability to employees. Professionals generally may not exempt themselves from liability to clients or patients.iii. More likely to be against public policy if the exculpatory clause is placed in the contract by person with much greaterB. Three types of Agreements in Restraint of Tradei. Price fixing schemes are against public policyii. Markey divisions are against public policyiii. Covenants not to compete are enforceable only if:1. The covenant is made in connection with the sale of a business or in connection with the contract of employment2. The covenant not to compete protects a legitimate business interest of the employer or the person buying the business3. The time and geographic area restrictions specified in of the covenant not to compete are reasonable: neither too long nor too broad in its territorial coverageC. Discriminatory contractsi. Racial, religious or sexual discrimination in contracts: unconstitutional violation by courts of equal protection under the lawii. Race-related restrictive covenantsD. Tortsi. Contracts involving commission of a tort are against public policyii. Example: hiring someone to defame a candidateIII. Results of illegality or violations of public policyA. General Rulei. The contract is voidii. None of the parties may enforce the contract, even the injured partyiii. Theory: In Pari Delicto – “In equal fault”B. Exceptioni. Protected classes, such as minors or employees may typically enforce illegal contractsii. Examples: can always sue to get minimum wageIV. IntroductionA. Formalitiesi. A defense to enforceability of an otherwise valid contractii. An oral agreement which should be in writing is classified as unenforceableB. Statute of Frauds Definedi. A statute which requires certain types of contracts to be in writing to be enforceable C. History and Originsi. The fraud corrected by the statute of frauds was the fraud of perjury not fraud in deceiving another person into entering a contractii. Interested parties could not testify at early common law, so contracting parties would hire a false witness to tell their side of the storyiii. The first Statute of Frauds in 1677 allowed interested parties to testify butalso required important contracts to be in writingD. Terminologyi. If a contract must be in writing for enforceability, it is said to be inside or within the statue of frauds.ii. If an oral contract is enforceable, the contract is said to be outside the statute of frauds.V. Sale of interest in landA. Entire Interest i. If ownership of land may be divided into various parts, the entire interest is the parts possibleB. Easementsi. The permanent right to use a portion of land without owning itii. Examples: roadway and utility easementsC. Profits i. The right to come onto the land and removing something from it.ii. Examples: mineral rights and timber rightsD. Mortgages i. A lien on land—a lien is an interest which allows a sale of property to collect a debtii. A mortgage five the rights to foreclose on land if an obligation is breachedE. Life Estatei. The right to exclusive possession of land for a term based upon someone’s lifespanii. Example: a man allowing his widow to live in his house until she diesVI. Performance beyond one yearA. Definedi. If performance of a contract must take more than one year from the date it is made, the contract must be in writing to be enforceableB. Possibility of Performancei. The mere possibility of performance within one year, however unlikely, takes the contract outside the statute so an oral agreement is enforceableii. Construction may be presumed to be possible to be performed within one year even though this would be highly unlikelyC. One Year is calculated from the MAKING of the Contracti. The measurement of the one year under this rule starts the day the contract is made, not when performance


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