Question

1. Explain what is meant by contracts contrary to statute. Provide the various ways this occurs and provide an example for each.

Answer 1

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Contracts to perform activities that are prohibited by statutes (certain types of conduct) are illegal contracts. E.g. price fixing Usury contracts that are contrary to the law are created when there is a contract that pays interest rates above the rate allowed by state or local law. Nearly every state has usury rules that are distinct. A usurious loan is legally invalid in certain countries. For jurisdictions which rule usury contracts void ab initio, if the courts are interested, the borrower forfeits both the theory and the interest. Many states allow a usurer to recover both the loaned concept and the interest up to the amount allowed under the statute. In still other states, only an individual can recover the initial principle through a usury contract.

Specific example and how they are contrary - Usurious rates depend on the type of loan in question. If there is no opposition to a usurious loan, the person who has taken out the loan is generally obliged to repay the full amount. Gambling contracts are invalid when they happen outside the gambling methods that are legally accepted. For Gambling Statutes making certain forms of gambling illegal. Many states enacted statutes that permit games of chance under a certain dollar amount, bingo games, lotteries conduced by religious and charitable organizations. Many states also permit and regulate horse racing, harness racing, dog racing, and state-operated lotteries. The contract will not be enforceable if a contract is found to be contrary to public policy. General principles are used to decide whether a contract is contrary to public policy, which is why this problem is very complex for many. As public policy issues arise, court decisions must be very vigilant. It will be void to have an arrangement that contradicts government policy or law. However, acts described in the contract can not be expressly prohibited. The explanation why it is difficult to define that agreements are contrary to public policy is that there is a case-by-case application of public policy. Many acts are not specifically prohibited by law but are so mischievous in nature that they can not be included in a legal contract. If the government has an interest in preventing the obligation from being met, a contractual provision could be objected to public policy. Over time, the perception of contracts that run counter to public policy has shifted. For example, in the past, a contractual provision that could be enforced today could very well have been against public policy.