Week 05 Contracts and Agreements Illegal Contracts Contracts usually void because the act to be performed has been statutorily declared illegal are: gambling contractsSunday contracts (in certain states)usurious contractscontracts of an unlicensed operatorcontracts for the sale of restricted articlescontracts in unreasonable restraint of trade. Usurious contracts Usurious contracts consist of charging a higher rate of interest than that allowed by law.The maximum contract rate is the highest rate that may be charged.The legal rate applies to all situations in which interest may be charged but in which the parties were silent as to rate. Null Contracts Any contract intended to restrain trade unreasonably is null and void. Examples are:Contracts not to competeContracts to restrain tradeContracts to fix the resale priceUnfair competitive practices Contracts contrary to public policy are void and include:Contracts limiting freedom of marriageContracts obstructing the administration of justiceContracts injuring the public service The Statute of Frauds The Statute of Frauds, passed in England in 1677, listed classes of contracts which had to be in writing. Most states have adopted with but slight variations the sections containing the lists of such contracts. The Statute of Frauds requires the following agreements to be in writing:Agreements to sell land or any interest in land, or to lease land for more than one yearAgreements in which the terms cannot be performed within one year from the time the contract is madeAgreements to become responsible for the debt or default of another. If such a promise is really made to gain some advantage for the promisor, it need not be in writing.Agreements of executors or administrators to pay the debts of the estate from personal fundsAgreements containing a promise of one person in consideration of marriage Parole evidence rule The parole evidence rule does not permit any testimony to be introduced to vary, add to, modify, or contradict the terms of a written contract unless there is evidence of fraud, accident, or mistake so that the writing is in fact not a contract or is incomplete or ambiguous. Generally, the rights under a contract may be assigned.The party making the assignment is the assignor.The one to whom the right is transferred is the assignee. There are some restrictions upon assignment:Laws prohibit assignment of future pay of those in the armed services.A contract involving personal services cannot be assigned.Rights transferred by assignment and duties transferred by delegation cannot be modified by the assignment or transfer.The parties may include a provision that prohibits assignment. Joint Contract A joint contract is one in which two or more persons jointly promise to carry out an obligation or in which two or more persons are jointly entitled to the performance. A several contract arises when two or more persons individually agree to perfor.

1. Week 05
Contracts and Agreements
Illegal Contracts
Contracts usually void because the act to be
performed has been statutorily declared illegal are: gambling
contractsSunday contracts (in certain states)usurious
contractscontracts of an unlicensed operatorcontracts for the
sale of restricted articlescontracts in unreasonable restraint of
trade.
Usurious contracts
Usurious contracts consist of charging a higher rate
of interest than that allowed by law.The maximum contract rate
is the highest rate that may be charged.The legal rate applies to
all situations in which interest may be charged but in which the
parties were silent as to rate.
Null Contracts
Any contract intended to restrain trade unreasonably is null
and void. Examples are:Contracts not to competeContracts to
restrain tradeContracts to fix the resale priceUnfair competitive

2. practices
Contracts contrary to public policy are void and
include:Contracts limiting freedom of marriageContracts
obstructing the administration of justiceContracts injuring the
public service
The Statute of Frauds
The Statute of Frauds, passed in England in 1677,
listed classes of contracts which had to be in
writing. Most states have adopted with but slight
variations the sections containing the lists of such
contracts.
The Statute of Frauds requires the following agreements to be in
writing:Agreements to sell land or any interest in land, or to
lease land for more than one yearAgreements in which the terms
cannot be performed within one year from the time the contract
is madeAgreements to become responsible for the debt or
default of another. If such a promise is really made to gain some
advantage for the promisor, it need not be in
writing.Agreements of executors or administrators to pay the
debts of the estate from personal fundsAgreements containing a
promise of one person in consideration of marriage
Parole evidence rule
The parole evidence rule does not permit any
testimony to be introduced to vary, add to, modify,
or contradict the terms of a written contract unless
there is evidence of fraud, accident, or mistake so

3. that the writing is in fact not a contract or is
incomplete or ambiguous.
Generally, the rights under a contract may be assigned.The
party making the assignment is the assignor.The one to whom
the right is transferred is the assignee.
There are some restrictions upon assignment:Laws prohibit
assignment of future pay of those in the armed services.A
contract involving personal services cannot be assigned.Rights
transferred by assignment and duties transferred by delegation
cannot be modified by the assignment or transfer.The parties
may include a provision that prohibits assignment.
Joint Contract
A joint contract is one in which two or more
persons jointly promise to carry out an obligation
or in which two or more persons are jointly entitled
to the performance. A several contract arises when
two or more persons individually agree to perform
the same obligation. A joint and several contract is
one in which two or more persons are bound both
jointly and separately.
Contracts may be terminated by: performanceoperation of
lawvoluntary agreement of the partiesimpossibility of
performanceacceptance of breach of contract.

4. Contracts may be terminated by operation of law.Bankruptcy
releases the debtor from most contracts to pay creditors.If the
innocent party in a breached contract delays too long in
instituting court action, the contract is terminated by the statute
of limitations.If one party to a written contract intentionally
alters a written contract in a material manner without the
consent of the other party, the other party is released from the
contract.
Breach of Contract
When one of the parties fails or refuses to perform the
obligations assumed under the contract, there is a breach of
contract.If a contract is breached by one party, the other party
may:Sue for damages. Damages may be nominal, compensatory,
punitive, or liquidated.Rescind the contract. If the innocent
party has executed the contract, anything parted with may be
recovered.