10
CHAPTER
Legal Purpose
and Proper Form
10-1 Illegal Agreements
10-2 The Statute of Frauds
Law for Business and Personal Use
© Thomson South-Western
10-1 Illegal Agreements
GOALS
 Identify various forms of illegal
agreements
 Distinguish agreements that, although
illegal, the courts will enforce
Chapter 10
Slide 2
Law for Business and Personal Use
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FOCUS
 Identify types of contracts that society,
through its courts of law, should not
enforce even though all the essential
elements for an enforceable contract
are present.
Chapter 10
Slide 3
Law for Business and Personal Use
© Thomson South-Western
WHICH AGREEMENTS
ARE ILLEGAL?
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Illegal lotteries
Agreements to pay usurious interest
Agreements involving illegal discrimination
Agreements that obstruct legal procedures
Agreements made without a required
competency license
 Agreements that affect marriage negatively
Chapter 10
Slide 4
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WHICH AGREEMENTS
ARE ILLEGAL?
(continued)
 Agreements that restrain trade unreasonably
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Price fixing
Resale price maintenance
Allocation of markets
Agreements not to compete
Chapter 10
Slide 5
Law for Business and Personal Use
© Thomson South-Western
Name four of the eight illegal
agreements discussed in this
section.
Chapter 10
Slide 6
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WHEN WILL THE COURTS ENFORCE
ILLEGAL AGREEMENTS?
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Protected victims
The excusably ignorant
Rescission prior to illegal act
Divisible contracts
Chapter 10
Slide 7
Law for Business and Personal Use
© Thomson South-Western
Under what circumstances will the
courts enforce illegal agreements?
Chapter 10
Slide 8
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10-2 The Statute of Frauds
GOALS
 Explain why the Statute of Frauds is
necessary and what it requires
 Identify the main instances when the
Statute of Frauds requires a writing
 Understand the rules of contract
interpretation
Chapter 10
Slide 9
Law for Business and Personal Use
© Thomson South-Western
FOCUS
 Must all contracts be in writing?
Chapter 10
Slide 10
Law for Business and Personal Use
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WHY HAVE A STATUTE
OF FRAUDS?
 Contracts within the Statute of Frauds
 Executed contracts
 Executory contracts
 Requirements of the writing
 Statute of Frauds requirements
 UCC requirements
 Special rules for signatures
Chapter 10
Slide 11
Law for Business and Personal Use
© Thomson South-Western
Name the six essential elements
in a writing required by the most
demanding Statutes of Frauds
standards.
Chapter 10
Slide 12
Law for Business and Personal Use
© Thomson South-Western
TYPES OF CONTRACTS WITHIN
THE STATUTE OF FRAUDS
 Contract for the sale of goods for $500
or more
 Contract to sell an interest in real
property
 Contracts that require more than one
year to complete
Chapter 10
Slide 13
Law for Business and Personal Use
© Thomson South-Western
(continued)
TYPES OF CONTRACTS WITHIN
THE STATUTE OF FRAUDS
 Contract to pay a debt or answer for
another’s debt
 Exception—main purpose rule
 Contract for which the consideration is
marriage
Chapter 10
Slide 14
Law for Business and Personal Use
© Thomson South-Western
Name the five types of executory
contracts that require a writing.
Chapter 10
Slide 15
Law for Business and Personal Use
© Thomson South-Western
HOW ARE CONTRACTS
INTERPRETED?
 Integration clause
 Specific rules of interpretation
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Analysis
Conflicting terms
Words
Authors of ambiguity
Implied reasonableness
 Parol evidence rule
 Exception to the parol evidence rule
Chapter 10
Slide 16
Law for Business and Personal Use
© Thomson South-Western
Explain the parol evidence rule.
Chapter 10
Slide 17
Law for Business and Personal Use
© Thomson South-Western