Complete the following questions using the notes below on legality and public policy and please use IRAC method to answer these questions:

1. The state of Maine requires that all plumbers must be licensed in order to contract for residential work. Route 128 Plumbing was hired to install a plumbing system for a new home that the Lazzaro family was building. Wilson was scheduled to do the work but unfortunately his license expired, and he was unable to renew the license due to the pandemic. Wilson's boss, Mitchell, stepped in to perform the work instead. When the job was finished, the Lazzaro family refused to pay claiming that Wilson was not licensed. Route 128 claimed that the company was entitled to their money for the job. What is the outcome?
2. Diane was scheduled for a surgical procedure. At her required doctor's appointment before surgery, Diane was given several documents to sign including one that indicated that it was an arbitration agreement. Diane was given the opportunity to review all of the documents and to ask questions. She was also given the option of taking the documents with her to review before signing. Even with these options, Diane signed the documents without reading them. After her surgery, Diane was disappointed in the results and filed a lawsuit against the surgeon. The surgeon claimed that based on the documents Diane signed; her only option for a remedy was arbitration. Diane objected and said that the agreement was unconscionable. What is the outcome?
3. Danielle leased an apartment from White Management Company. Danielle paid for six months and then stopped making payments. White Management sued Danielle for the money that she owed. However, Danielle claimed that White could not collect the money because Danielle was running her business from the apartment which was illegal in the city where the apartment was located. Danielle stated that White was aware of the situation and city records showed that White had been contacted by the city. The city called White once Danielle registered her business with the city and gave the address of White's building as the address for her business. White Management did not take any action at the time. What is the outcome of the lawsuit?

LEGALITY AND PUBLIC POLICY NOTES: A. Illegal contracts 1. The agreement is void, and no court relief exists a. When an agreement is illegal, the parties are not entitled to any relief from the courts. Example: Sam enters into an agreement with Jason to buy $10,000 worth of illegal fireworks in Massachusetts where the purchase and sale of fireworks is illegal. Jason requires Sam to pay him the $10,000 in advance and Sam delivers the money. Jason never delivers the fireworks and Sam sues. Will he recover the money? Answer: No, Sam was aware that it was illegal to purchase fireworks. Therefore, Sam is equally guilty of entering an illegal contract. The courts will not enforce the contract because both parties have "unclean hands". The "Clean Hands Doctrine" or the "Doctrine of Clean Hands" means that a person coming to court must not have done anything wrong (must have clean hands) B. Exceptions to effect of illegality 1. Protection of one party - a. Protection of one party -- If a statute is clearly designed to protect a certain class, a member of the class can enforce a contract in violation of the statute. Example: State statutes limit employers from forcing their employees to work an excessive number of hours. However, an employee who has been forced to work overtime can recover overtime pay because the statute exists to protect the worker even if the employer forces them to work beyond the time allowed by law. 2. Unequal guilt a. The least guilty party may recover when the public interest is served -- An innocent party who has fully performed may be able to enforce the contract Example: I enter a contract with Krysten to make a delivery to North Carolina. Once the delivery is made, I refuse to pay because the shipment contained illegal merchandise and I state that the Krysten knew the products were illegal. Can she collect the money owed? Answer: The first question to ask is if the contract was for something that is legal. In this case a contract for the shipment of goods is legal; it is the product that is illegal. The second question is if there is independent evidence that the other party knew about the illegal merchandise. In this case there is no proof, other than my word, that the driver was aware the products were illegal. Based on these facts, Krysten has "clean hands" and he can recover the money owed for delivering the product. C. Partial illegality - A contract may involve the performance of several promises, some of which are legal, and some illegal. 1. Legal parts are enforced if possible Example: Andrew entered a contract with 7-11 for 150 Big Gulps for $2.00 each to be delivered on March 15. He also ordered $500 of CBD Edibles for delivery on March 22. He received both orders but refused to pay claiming that the contract with 7-11 was illegal (due to the edibles) and unenforceable. Will the court enforce the contract? Answer: Since the contract that Andrew made with 7-11 calls for separate performance (delivery of Big Gulps and separate delivery of CBD edibles), the courts will enforce the legal parts of the contract and ignore the illegal parts. Therefore, the courts will force Andrew to pay for the $300.00 for the drinks and ignore the contract for the edibles. D. Crimes and civil wrongs 1. An agreement that calls for the commission of a crime are illegal. Example: Peter hires Carl to rear-end his car so that he can file a claim with his insurance company for medical bills. He promises to pay Carl part of his settlement. This agreement is unenforceable because it is illegal to file a false report.

2. An Agreement that calls for the commission of a civil wrong are illegal. Example: A contract to infringe on the patent of another company is also illegal and unenforceable. The previous discussion centers on contracting for something that is illegal. However, Illegality takes many forms. The discussion below outlines other issues that may be encountered and may make a contract unenforceable. A. Unconscionable and oppressive contracts -- A contract is unconscionable when it is too harsh or oppressive to one of the parties who were left with no opportunity for negotiation at the time the contract was agreed to. A contract or clause is determined to be unconscionable on the basis of the circumstances existing at the time the contract is made. If a contract or portions of a contract is unconscionable, it will be set aside as void. 1. Provision in contract or bargain which is so unfair to a party that no reasonable or informed person would agree to it. In a lawsuit for breach of contract, a court will not enforce an unconscionable contract. The court in such a case will determine that to enforce the contract would be grossly unfair to one of the parties based upon their being misled, lacking information or signing under duress or misunderstanding, often due to the acts of the person seeking enforcement 2. Determination of unconscionability a. Procedural unconscionability: Procedural unconscionability occurs when one party is incapable of understanding the terms or is surprised by a hidden term or fine print in the contract. Example: A Motorcycle dealer creates a standardized contract that contains fine print which makes the buyer responsible for any defects in the motorcycle. The average person would not understand this clause and the courts would rule that it is unconscionable and unenforceable. b. Substantive unconscionability: Substantive unconscionability occurs when the contract terms are so one-sided that they shock the conscience. This usually happens when one party has superior bargaining power, which allows them to dictate the terms. Example: A clause in a credit card agreement that limits the cardholder to arbitration as their only remedy to settle a dispute but allows the credit card company to seek a remedy through the courts. B. Agreements contrary to public policy -- Another form of illegal contract is one that affects the public welfare or is contrary to public policy. An agreement is contrary to public policy when it is so offensive to society that judicial intervention is needed to preserve the public good. 1. The concept of public policy - contract is offensive to society Example: Selling public office -- Former Illinois Governor Ron Blagojevich was convicted for attempting to sell, or trade, the U.S. Senate seat that was open when Senator Obama was elected president. Blagojevich was sentenced to 14 years. Example: Jasiel Correia, the former mayor of Fall River, Massachusetts, was convicted for taking bribes from marijuana companies who were looking to open dispensaries in Fall River. In September he was sentenced to six years in federal prison. Example: The college admissions scandal where parents paid money to bribe coaches and administrators and to facilitate cheating on entrance exams in an effort to gain admissions to colleges and universities. 2. Gambling, wagers, and lotteries - Gambling contracts are illegal. Gambling and Lotteries in many states are legalized by state law or statute (and are run by the state government). Raffles and Bingo games are legalized by statute if the funds are used for a charitable purpose (churches, schools). Most states require a permit for these types of activities Promotions and Giveaway plans are lawful so long as you do not have to buy anything or give anything of value to participate. Example: No purchase is necessary to enter contest. C. Regulation of Business 1. Statutory regulation of contracts - Consumer Protection statutes require that a consumer can rescind the contract in certain situations. Laws related to truth-in-lending, installment sales, mortgages, and home improvement contracts require that the contract specify the cash price, down payment, trade-in value (if any), the cash balance, interest, and finance charges. 2. Licensed callings or dealings A. Protective license -- Licensing exists to provide public protection in certain areas where expertise is required. A license may be required for a particular business, or trade such as lawyer, doctor, real estate broker, electrician, and contractor. If a license is required, a contract made with an unlicensed person is not enforceable. Example: Anderson worked as a real estate broker even though he did not have a license. He sold a house for $400,000 and was expecting a 5% commission of $20,000. The company refused to pay the commission and Anderson sued. Is he entitled to the money? Answer: No, the law requires him to be licensed. Because he is not, he cannot recover any money for the sale. B. Revenue raising license -- If no expertise is required, or the license is easily obtainable, a party may recover after obtaining the license. Example: fishing license, hunting license, or a building permit obtained from town hall. D. Contracts in restraint of trade - arrangements where companies agree to fix prices or not compete are void. E. Agreements not to compete - These agreements are enforceable in the following situations; however, they must be reasonable in terms of time frame, geographic area, and scope of work in order to be enforced. 1. Sale of business - an agreement not to compete in the sale of a business is designed to protect the value of the business that the party is buying. In general, you are not only purchasing the business and its assets but the customers, or patients, and the goodwill Example: Jennifer sold her business, Jennifer's Tax Tips, to Stephanie. As part of the sale, Jennifer signed a non-compete agreement stating that she would not operate another Tax business within 10 miles for one year. Three months after the sale, Jennifer opened another Tax business. Stephanie sued for breach of the non-compete agreement. Will she win? Answer: The courts will enforce a non-compete agreement as long as the restrictions are reasonable. Both the 10-mile restriction and the one-year time frame are reasonable; therefore, the court will uphold the agreement. 2. Employment contract - Restrictions to prevent former employees from competing with your business are enforceable if they are reasonably necessary to protect the employer. The agreement must also be reasonable in terms of time frame, geographic area, and scope of work. Example: The state of Massachusetts prevents employees who are in charge of awarding state contracts to outside vendors from working, or consulting, for any of those vendors for one year after leaving state employment. F. Usurious agreements - Usury is committed when money is loaned at a higher rate than the maximum allowed by law. In Massachusetts the rate is 20%. Please note that this law relates to legally lending money, it does not relate to illegal practices of lending money. 1. The penalty for violating usury laws vary but may include: 1) allowing the loaner to recovering the amount loaned but preventing the recovery of any interest, 2) allowing the loaner to recover the principal and interest up to the maximum amount allowed by the state, 3) penalize the loaner by assessing a fee that is double the interest charged. The penalty in Massachusetts is imprisonment for not more than 10 years, or a fine of not more than ten thousand dollars, or both a fine and imprisonment. Example: I lend you $100,000 for one year. At the end of the year, you must pay me $150,000. Is this within the legal limit? Answer: No, $50,000 is a 50% interest rate which exceeds the maximum allowed.