General Rule: where one or more parties to a contract undertake to commit an illegal act or an act contrary to public policy, or where the purpose of the act is same then courts have both the power and duty to declare contract null and void.
If it is possible to sever offending terms, then the contract will still be enforced-courts will sever a provision that is illegal or contrary to public policy as long as severance does not violate intention of parties and result is something we can live with.
Christie v. York (Supp)
Majort: Freedom of K cited to permit tavern owner from refusing to serve black man. Freedom of K more important than ending discrimination.
This case illustrated that freedom of contract is actually a judicial construct that is as limited or as extensive as the judiciary makes it.
Dissent: Freedom of K is absolute but when license to sell liquor is granted by government then should not have such freedom to pick and choose customer. When state controls exclusive sale to public, then freedom of K has no application.
Shows has access to K does not get you very far. F of K is a court construct and its ambit is determined by courts not parliament.
Ian Ayres: “Fair Driving: Gender and Race Discrimination in Retail Car Negotiations”
Author and students did summer long study re treatment of white men and women, black men and women. Study illustrated differentiated treatment-white men fared best, then white women, then black men and then black women.
Theory: stereotypes and assumptions determined what the dealer was willing to offer. Suggests gender/race act as substitutes to aid dealer in deciding what they are prepared to pay. Ability to get fair bargain based on issues completely unrelated to F of K. Maybe unconscionability should factor in race, gender.
Illustrated that access to entering into contracts is unequal and is effected by immutable characteristics of the person. Parties begin the bargaining process in positions that are unequal, suggesting that freedom of contract is exaggerated and may, in reality, be impossible to attain.
Law of K based on market assumption that everyone has freedom of K -no in reality.
Farrar v. McPhee (Supp)
P making claim against estate. P was housekeeper, had relationship with the man of the house, he kicked out his wife. P had 7 children with her boss, he meant to leave $ to her and property but he died intestate. P says there was oral agreement that he would give her all his property. P was with him for 22 years, was no divorce. In alternative to property, claims $25,000 for work done. Man’s daughter is D.
P must prove written K exists. Court did not accept P’s evidence regarding existence of a K. Plaintiff’s quantum meruit claim was defeated on the basis of public policy – immoral relationship. Foundation of relationship was illegitimate and immoral. Only consideration was immoral activity-contract for sex. Parties may have been free to enter into an agreement but the court would refuse to enforce it on the basis of public policy because of the “immorality” of the relationship. Plaintiff loses.
Deglman: inability to enforce K does not stand in way of claiming services rendered.
Jones v. Daly
Almost identical to Farrar except same sex relationship. D’s are executor’s of Daly who died. P was Daly’s gay lover. P and D entered into oral agreement whereupon P gave up work to move in with D, travel with him etc. Agreed it combined efforts and earnings-P received allowance-were co-habitating.
D’s argue sexual services were express and inseparable part of K and thus K should not be binding because the law won’t allow for it. Court agreed-K is unenforceable and based on sex. Like Farrar—but here there was a clear K-the courts do not recognize same sex relationships.
Court imposes their perception of public policy concerns.
Chrispen v. Topham
P and D lived together. Had agreement regarding division of expenses. She paid him rent and kept track of expenses but they broke up. She owed him rent =$3280. She gave him promissory note-he brings action for not being paid. P counterclaims for household and other work.
Court says agreement valid. His claim was successful. Court did not accept D’s contention that there was undue influence, duress or unconscionable transaction. Cannot be argued agreement was for immoral purpose b/c present day social standards counters argument. Promissory note is acknowledgement of debt.
D counterclaims for housework. P says this was not part of the K. D rebuts that they were to have equal status, including sharing of work—court agrees. Cited Hawrish and said non-contradictory parole evidence can be admitted to establish explanatory or collateral undertaking that affected written one and it must be proved strictly.
Here it was—assessed work at certain wage and P owed her $.
Avoided PER by saying intent was not to have written K the only part of agreement.
Court said it was not concerned about the content of the K. This decision seems to imply that people are free to enter into K even when the relationship between them has a sexual component, and that the courts will enforce these K.
Based outside of contract: was unjust enrichment; quasi-contract (Delgman). Quantum meruit permits recovery in both K (Chrispen) and non-K (Deglman).
Baby M
Surrogacy K. Child bearer does not want to give up child. Sterns sue child bearer for SP.
Court said K was void b/c against public policy. Surrogacy K was void b/c it was contrary to the laws of the state that prohibite money to be used in adoptions, requires proof of mental unfitness before termination of parental rights. Court said money in exchange for baby taints the entire K.
Despite child bearer apparently giving consent to arrangement, the court proceeded with custody decision and awarded baby to the Sterns with some visitation rights to Ms. Whitehead.
Notes:
Is contract law the correct area to be dealing with this issue? Public policy is alive and an issue in K law.
