Here’s the short version: While working on the newer incarnation of “Beverly Hills 90210,” Brian Austin Green apparently started dating co-star Vanessa Marcil-Giovinazzo. During the course of their courtship, Green lent Marcil approximately $200,000 in $50,000 increments. This was in the year 2000. In November of 2011, Green tried to collect on his loans to no avail. So Brian Austin Green filed a lawsuit against Ms. Marcil-Giovinazzo (PDF). Will he be able to enforce that agreement through the courts?

The lawsuit alleges, among other things, breach of contract and breach of oral agreement. Since the Complaint (linked above) does not include the supposed written contract, we will assume that there is only an oral contract. But what’s the point of trying to enforce an oral agreement? You can’t prove an oral agreement so it can’t be enforced, right? Not quite.

Oral contracts are just as valid as written contracts in most situations. The only difference between the two is that without something in writing, the terms of the contract are much harder to prove. But if there are circumstances evidencing a contract (for example, a witness to the agreement, or acceptance by performance), it is possible to enforce an oral contract just as one would enforce a written contract. So long as there is an offer, acceptance, and consideration, an oral contract can be enforced.

There are situations in which an oral contract is not accepted, however, and these are covered by what is known as the Statute of Frauds. The statute of frauds is typically governed by statute (no surprise there), and requires that certain types of agreement be in writing to be enforceable. Traditionally these agreements involve marriage by contract, contracts that will take over one year to perform, contracts for the transfer of land, and other situations involving executors, guarantors for someone else’s debt, and sales of goods. In Mr. Green’s claim, none of these apply, so the statute of frauds does not require that a written contract exist in order to enforce the agreement.

Some of you who are in the know might be tempted to claim that the Statute of Limitations precludes a claim for this amount of money. The statute of limitations is a time period set by the state or federal government during which certain types of claims must be made. These differ from state to state and claim to claim. Generally, though, if you try to bring a claim that is outside the statute of limitations, it will be dismissed. The purpose of statutes of limitation is generally to ensure that claims are brought within a time when the evidence is fresh or to ensure that the claim is fair. For instance, in Minnesota the statute of limitations on construction claims is 10 or 12 years (depending on the circumstances), to keep construction companies for being liable for anything that fails at any point in the future. It’s not fair to expect that construction will last forever, so there is a limit on the time period within which a person can bring a claim.

All that being said, Mr. Green’s claim does not exceed the statute of limitations for a breach of contract claim because the demand for the return of the money didn’t occur until November of 2011. So it has really only been 2 months since the breach occurred, which I would guess is within every state’s statute of limitations for breach of contract.

But if Mr. Green can’t show a written contract, he has a significant problem outside the scope of contract law, which involves the difference between a loan and a gift. A loan involves contract law because there is a promise to pay money back under certain circumstances in exchange for being loaned that money up front. A loan involves an offer, acceptance and consideration. A gift, however, does not involve any consideration. In other words, the person giving the gift does not ask for anything in return for giving the gift, so a gift cannot be a contract.

This is a potential problem for Mr. Green because in the case of being in a romantic relationship, undocumented loans are generally considered gifts. Oftentimes after a relationship has gone sour, people will try to retroactively claim that a gift was actually a loan and demand to have it returned. But all that matters for the purposes of the law is the intent at the time the money was given. If there is no documentation of the loan and the parties were romantically involved at the time, Mr. Green is going to be hard-pressed to prove that the $200,000 is a loan rather than a gift.

At the end of the day, this case probably turns on whether there is a written agreement. If so, it will be easy to prove a loan and the terms of that loan. If not, then although the statute of frauds does not apply, the money will likely be presumed to be a gift in light of their relationship at the time, and proving any sort of terms of a loan without any other evidence will be nearly impossible.

Good luck, Brian Austin Green. You’re going to need it.

(photo: http://www.flickr.com/photos/lovelornpoets/6214449310/)

On October 5, 2011, David Cassidy sued Sony (among others) for his share of 40 years of Profits from the Partridge Family. The suit alleges that Sony and the other defendants “have been perpetrating a scam,” having only been paid approximately $5,000 for royalties on Partridge Family merchandise. Although it may seem strange now, The Partridge Family was incredibly popular when it aired from 1970 to 1974, spawning “board games, magazines, coloring books, paperbacks, posters, pillow cases, toy guitars, dollars [what?], lunch boxes, beach towels, pencil cases, comic books, children’s clothing, and music.”

According to David Cassidy’s Complaint (which you can get here as a PDF), he was only paid $5,000 for merchandise royalties even though his contract from 1971 stipulated that he would get 15% of net merchandising revenues for the use of his image, voice, or likeness. He was to receive no more than 7.5% of net merchandising revenues for items on which other members of the cast appeared in addition. Page 11c of the contract seems to belie that assertion as true. That said, there is some potentially troubling language elsewhere in Paragraph 9 of the contract—the paragraph which contains the royalties percentages.

In the first paragraph of Paragraph 9, the contract states that “The rights granted pursuant to this Paragraph 9 shall continue during the term of your employment hereunder until the expiration of the first run telecasting of pictures (including Summer reruns).” The defendants to this suit are likely going to argue that the royalties were paid during Mr. Cassidy’s term of employment per the contract, and that statutes of limitations limit any other attempt by him to recover. My take on this is that even though those two arguments may be legally sound on the face of things, that the contract itself is unconscionable with regard to the time limit on payment of royalties to Mr. Cassidy.

What are all these terms I’m throwing around all of a sudden?

The Statute of Limitations is a statutory law written by a state or federal legislature, which governs how long after an even a lawsuit can be brought to recover or prosecute on that event. In Minnesota, the statute of limitations for a breach of contract is six years. So if you wait to bring a breach of contract claim in Minnesota until 7 years after the breach, you could find that your case is thrown out for violating the statute of limitations.

The purpose of having statutes of limitations is mainly to ensure that claims and cases are brought when the evidence is still fresh. So in some cases, where there is an ongoing offense or breach, each episode of the breach can be treated as separate, and have its own separate statute of limitations clock running. In a situation like Mr. Cassidy’s—where he is bringing claims for as far back as 35 years ago—it’s possible that the court would look at those claims and only allow him to make claims on those breaches that had occurred within the 6 years prior to filing the lawsuit. Each state has its own rules and procedures on these situations, so you should definitely check with an attorney if you think this may apply to you.

If the statute of limitations is a problem for Mr. Cassidy, then asserting unconscionability could be beneficial. A contract is unconscionable when its terms are excessively unfair to one party. This is usually asserted against the party that wrote the contract, since it had control over writing the agreement. Unconscionability is more likely when there is a significant power differential between the parties, such as when Sony is negotiating a contract with a single performer.

Generally unconscionable contracts are unenforceable, but in this situation, where Mr. Cassidy is asserting that the studio has deprived him of what should have been his under the contract, the court could decide to strike the limiting provision from Paragraph 9 and award Mr. Cassidy back payments on those merchandising royalties. This assumes that a court would find the studio’s contractual provision limiting the right to royalties to while the show was airing to be unconscionable, which it might not. I would argue that the studio kept receiving revenue from the use of Mr. Cassidy’s likeness even after the show was no longer producing new episodes, and that Mr. Cassidy should be entitled to royalties from that revenue, but that is an issue for the court to determine.

It will be interesting to see the outcome of this suit. Mr. Cassidy clearly has a claim that is reasonable on its face, but whether it can survive the statute of limitations argument is unclear to me. If so, will the court allow the claim for the entire 35 years, or only the past 6? If it’s only the last 6 years, is there really that much net revenue from Partridge Family merchandise sold in that period of time? That’s not likely, so a determination on the statute of limitations question could determine the rest of the case.

What do you think should happen in this situation? What does your gut tell you? Do you think your gut and the law line up? Tell us in the comments.

(photo:http://www.flickr.com/photos/davedehetre/)

Recently Yahoo! in the United Kingdom updated its email terms and conditions to the great dismay of many of its users and other privacy watchdogs. The change allows Yahoo! to read the email, instant messages, and text messages of its users and any incoming messages to their accounts, for the purposes of targeting advertising.

This is nothing new for users of webmail services, but it is interesting that Yahoo! expects its users to notify anyone who emails them of the fact that their email may be scanned by Yahoo!. One legal analyst has stated (I believe correctly) that this requirement is impractical. Under United States law, that impracticability could potentially invalidate the provision.

But this third party email scanning provision is potentially invalid in another way as well. The provision binds third parties (or alternatively, invades their privacy) by acting on the provision allowing the scanning of email and other messages. But it does not provide a method for non-Yahoo! Mail users to opt out of the provision.

In more familiar terms, it’s not the third party’s choice to use either the United States Postal Service or UPS to send a package; it’s a statement that no matter which shipment method you use, the management at the building where your parents live will search the package before it’s given to them. Since the third parties have no control over the address at which their parents live, or the policies of that building, they cannot opt out of anything to prevent the search. Rather, the sender’s privacy will be invaded simply due to the address at which the recipient lives.

Because there is no offer or acceptance, this is not an issue of contracts—it’s a violation of privacy. And it is an issue that will need to be resolved by Yahoo! if it doesn’t want it resolved by the courts instead.

A couple weeks ago I was struggling to find a topic for Fine Print Friday, caused mainly by a lack of contracts offered by the services I was investigating.

My first attempt at a topic was for senior living facilities. According to Assisted Senior Living, the largest senior living provider in the United States is Brookdale Senior Living, followed by Sunrise Senior Living (of which my grandmother was a resident for a few years). I contacted local outposts for both Brookdale and Sunrise in an attempt to get a copy of each of their respective residential services agreements, because these documents were not available on their websites.

I received return email and phone calls from the establishments I had contacted, but after much back and forth with each site, I was told that the contract is not provided to potential residents until the actual sign-up process, wherein the site manager would go over the contract with the prospective resident. That causes at least two significant problems: (1) There is no time for the prospective resident to look over the contract prior to determining whether to live at that establishment; and (2) The manager in charge of explaining the contract to the prospective resident has a vested interest in ensuring the individual signs the contract. That is a significant conflict of interest that should be avoided if at all possible.

After discovering that I was not making any progress with senior living facilities, I switched to health clubs, the largest of which is 24 Hour Fitness. I also tried Gold’s Gym, which is one of the most well-known fitness chains. On the websites of both of these chains a person can become a member in a few simple steps. The problem is that neither of these online processes involves seeing or agreeing to any sort of contract (at least, not before you enter your credit card information, which is where I stopped the process).

After significant digging on the 24 Hour Fitness website, I did find the 24 Hour Fitness Member Policies, but it is not an agreement and not presented to prospective members when signing up online.

Here is a different problem than what I encountered with the senior care centers: The fitness centers’ online membership procedure does not even present the prospective member with a contract to look over before signing up. Presumably the membership policies for 24 Hour Fitness act as a contract, but since they are not presented in a manner that requires you to agree to them, they cannot serve as an agreement to which a person acceded. Rather, without any agreement provided during the sign-up process, the new member cannot be clear what is expected for either party during the new relationship. But that is precisely what contracts are for—to lay out the expectations so there are no irresolvable conflicts during the course of the relationship.

The most important lessons from this experience (as determined by me) are:

1. Never sign up for anything if you are not even allowed to see the contract before starting the process.

2. Keep in mind who the contract benefits and how that influences the person explaining it to you.

3. Many contracts are considered agreed to simply by using the service. If you are concerned about what the contract says and it hasn’t been deliberately presented to you, find it before agreeing to anything, signing anything, or giving someone money related to that service.

4. Not providing a contract immediately does not necessarily mean that a person or company is being deceptive; it is simply a potential warning flag, and and indication that more research should be done before going all it.

If you have been reading this blog at least semi-regularly you will notice a couple issues given this post’s title: (1) A contract to kill someone, and (2) Modification of a contract. There technically isn’t anything wrong with modifying a contract, but generally every party to the contract needs to agree to the modification in some way. In this situation, the contract was unilaterally modified (read: changed by the boss).

Here’s the quick version of the story, which takes place in England and was written about in The Telegraph (although the article is a bit rough):

Simeon Henderson decided to become a hit man because he couldn’t find other employment. He somehow managed to completely fail his first two jobs, for which he was only paid approximately half of his initial price. To make up for the failed jobs, his “employers” required a third job. The third job required him to avoid killing anyone…so, of course, he ended up killing someone.

The entirety of the story reads like a game of Mafia Wars, or a scene from Lock, Stock, and Two Smoking Barrels. (You really should read it.) But it illustrates a couple of important contractual concerns as well. Since this is a contract for an illegal purpose it is unenforceable, but even if it were found to be enforceable, is the modification valid? Here’s the analysis.

Normally, Mr. Henderson would be considered to have breached the contract for his failure to sufficiently perform on both of the material terms of the agreement. (Killing the target is a material term; killing him by hanging him rather than shooting is probably immaterial.) In a normal breach of contract situation Henderson’s employers would likely be excused from paying him anything, and might be entitled to a return of the amount they had initially paid him. They modified the agreement, however, allowing Henderson to cure the breach by making up for the initial problems by performing an additional duty.

Typically a party is allowed to either propose a cure for the breach or just take the damages. However, parties are also generally required to mitigate damages by taking actions to keep damages from contract breaches from continuing and causing more damage. For Henderson’s situation, the employers could have just sent him on his way, not paid him the rest of the money, and cut their losses.

Instead, they proposed a situation in which Henderson could cure the breach, although it is unclear whether this was a setup to get Henderson arrested. Either way, Henderson still failed to cure the breach. He was supposed to threaten a shopkeeper and at most shoot the shopkeeper’s clerk in the leg. Instead, he lost control of the gun and killed the clerk.

At the end of the day, the contractual situation doesn’t really matter given the illegal nature of the subject matter (thereby making the contract unenforceable). What is really remarkable in this situation is Henderson’s ability not only to breach the contract twice, but to fail to cure the breach when he didn’t even need to do anything other than be threatening.

So the contract modification in this situation is not actually a problem given that it was a proposed method for curing the breach and was accepted by Henderson by his attempt to perform on the modification. Unfortunately, Mr. Henderson is apparently unable to perform properly any contractual task, so he will always be in trouble for breaches (once he is released from prison).

Just like the given letters in the bonus round of Wheel of Fortune, there are provisions that are common to almost every commercial contract. You can pretty much assume that you will find most (or all) of the following provisions in any commercial or adhesion contract you encounter, and can instead focus your attention on the clauses that are unique to the contract. Knowing what these common provisions are should help you be more aware of what happens each time you sign a contract, and allow you to more effectively skim those blasted contract monstrosities, like the Hertz Rent-A-Car agreement.

UPDATE: These are not the only provisions you are likely to see in consumer contracts. I’ll post more of these in the future. For the sake of readability, I have limited this list to nine types of contract provision.

1. Limitation of Liability. Almost every contract has a section describing how the drafting party (not you) cannot be held responsible for any damages or injury to you or your property, for whatever reason, intentional or unintentional, and that you have no recourse if some damage or injury occurs. These provisions are not always enforceable, but they are always in the contract and should be considered enforceable if you are planning to sign the contract. It’s worth noting that some Limitation of Liability provisions also limit the maximum possible dollar amount to something absurdly small (like $50 in the case of Apple’s iTunes Terms and Conditions.)

2. Separability (or Severability). Separability/severability is the ability of the rest of the contract to remain in force even if individual clauses are deemed unenforceable. So if you entered into a contract to buy a car from someone, and one of the provisions of the contract stated that you promised to use the car to rob a bank, that clause could be eliminated because it is illegal—and therefore unenforceable—but the rest of the contract to buy the car could still be enforced.

3. Heirs, Successors, and Assigns. What? What are those? “Heirs, successors, and assigns” are people who might take over the contract in the future, and this is a way that the drafter can ensure that the contract will be honored regardless of who takes over the obligation. For the purposes of larger commercial contracts this is important in case a company is purchased or subsumed by another individual or company—the contractual rights and duties are still in force. For contracts with individuals, this provision is meant to allow the drafter to collect any obligation from someone related to the person who signed the contract.

4. Costs and Attorney Fees. It is generally understood that if one party breaches a contract in a way that requires the other party to incur costs or attorney’s fees to fix it, that those costs will be borne by the breaching party. Every credit card agreement has this provision in it in case an account requires a collections agency and/or attorney to collect the money from a cardholder. In those cases, the costs and attorney’s fees are rolled directly into the amount being collected or sued on.

5. Voluntary Agreement/Competency. As I have previously mentioned, a person needs to voluntarily enter into a contract for the agreement to be valid, and the person also needs to be considered competent–i.e., above 18 years of age and sane. Because two good defenses to the formation of a contract are incompetency and duress/coercion, it is likely that some sort of provision of this sort will be in the contract so if you challenge it later on one of those grounds, the drafter will be able to claim that you fraudulently misrepresented your capacity to enter into the contract in the first place and should therefore be bound to the agreement that was made.

6. Entire Agreement. To avoid later claims that the parties agreed on an addition to the contract (either orally or in writing), a clause is usually inserted stating that a contract represents the entire agreement and that no additional terms or conditions apply that are not included in the document. This is important for the safety of both parties, but you should therefore make sure that any oral promises are included in the contract to ensure they are part of the agreement.

7. Changes. Most adhesion contracts include a term allowing the drafter to unilaterally alter the contract at any point. Granted, the change in the contract must be approved by the other party, but often this occurs tacitly rather than actively. So when your credit card company decides to change your interest rate, so long as you do not dispute the change, close your account, and cease to use the card, you will have agreed to the change. This passive acceptance is common in consumer contracts, and should be expected in every large-scale contract you encounter.

8. Waiver and Indemnity. To provide extra protection for anyone connected to the drafting party, these clauses are often included and state that you will not hold anyone with ties to the drafting party responsible for any harm or damage that occurs during the execution of the agreement. A phrase to look for in these provisions is “hold harmless,” meaning that you will never accuse that person of wrongdoing in relation to the subject matter of the contract.

9. Disclaimer of Warranties. A warranty is an expectation that a product or service will provide the desired outcome or function, and it is something that most of us expect when we purchase or sign up for a product or service. Many contracts for goods and services, however, like to disclaim any warranties, meaning that if your product or service does not work the way you wanted it to (even if you were guaranteed its function by the company), that lack of function is not the company’s fault and they are not required to do anything about it. As a practical matter, many companies will attempt to fix problems with their products or services to keep their name in good standing, but they aren’t required to do so if there is a disclaimer of warranties in the contract. (In some jurisdictions disclaimers of warranties are not enforceable, but the contract usually provides for additional limitations on responsibility and damages in those jurisdictions.)

That’s a pretty good overview of the most common clauses you are likely to find in consumer contracts for goods and services, as well as many other contracts, settlement agreements, and the like. Read over them and get used to them so you can recognize them the next time you need to sign a contract. Even if you can’t do anything about them, it helps to know they are there.

Are there other common contractual clauses you have run into? Let me know so I can either update this list or put together a second list.

(photo: http://www.flickr.com/photos/santarosa)

I just discovered a story from a couple years ago involving eBay, a buyer, an RV and killer bees, and it is a great example of how not to escape a contract.

As we know already, a contract requires an offer, acceptance of that offer, and some sort of consideration. If those three elements are present, then a contract is assumed (unless there are other reasons to invalidate it).

In the case of the RV situation, a man found an RV up for auction on eBay (the offer) that he wished to purchase, placed a $15,000 bid (the acceptance) on it and won. Since the price for the vehicle was normally $29,999, he figured he got a great deal and therefore sent in his $250 deposit (his consideration—the seller’s consideration was the vehicle) immediately. That’s when he was informed that there was a problem with the RV and he would not be able to take possession of it from the seller. Luckily, this fellow realized that he was the victim of a broken contract and took proper steps to remedy the situation.

If you read through the entire story, you will see that the sale was a problem for the seller, who claimed that it would “not allow [the buyer] to swindle [the seller] out of $15,000.” Consequently, the seller made up a story to attempt to escape the contract. Apparently, immediately after the auction, a swarm of killer bees took up residence inside the RV, and proceeded to cover the inside with honey. They needed to be vacuumed up and killed with toxic chemicals, leaving the vehicle unsafe for use. The buyer was not deterred, however, and stated that he would still accept delivery, destroying the seller’s first attempt at escaping a valid contract.

At that point, the seller produced a second—and entirely contrary—excuse: it never formed a contract with the buyer, and besides, it didn’t possess the RV anymore anyway.

So here are the problems. First, contriving a story to convince the other party that the contract cannot be fulfilled is not a good strategy, because it is acting in bad faith in trying to essentially renegotiate or cancel the contract. Even if the story was true, however, the buyer still agreed to accept delivery of the purchase in its altered condition. This acts as an acceptance of a modification of the agreement (which was originally for a vehicle in good, non-bee-infested condition), and still affords the buyer the right to claim his purchase.

Second—and aside from entirely contradicting the first reason for cancellation of the contract—the seller clearly had a contract and instead opened itself up to an even more convincing breach of contract by stating that it had disposed of the specific product it had sold to the buyer. There are plenty of sufficient remedies for the seller in this situation, including providing either another vehicle of the same model and condition, or a vehicle that is sufficiently similar to fulfill the contract. Neither of those options were offered, however, and the seller instead made a very good case for being found in breach of the contract.

Here are the morals of the story: Be sure of the offer you present, so you don’t need to worry about its acceptance. And if the offer turns out to be wrong, don’t hide the mistake; admit the mistake so you have a better chance of renegotiating the contract, or getting out of it via other contract defense theories (such as a lack of meeting of the minds, or mistake of fact).

(photo: http://www.flickr.com/photos/kaibara)

I talk a lot about how contracts work on this site, but have not yet explored much about how contracts come into being. Over the coming weeks, I intend to spend some time on important considerations when forming contracts, one of which is Power.

Since contracts are always between at least two parties, at times it is important to keep in mind whether one party has more power over another. This can lead the less-powerful party to make concessions in the agreement, or even agree to terms that are not in its interest, simply to get the deal done.

Of course, in some circumstances where the power differential is too great, a contract might be considered void because it was entered into due to duress or coercion, but generally parties are free to contract how they want with whom they want. So it’s important to always keep in mind the potential power a contracting party might have over you, and whether you are interested in the benefits of the deal enough to potentially undergo the power of the other party.

I recently came upon a video that does a great job of quickly explaining why this power difference can be so detrimental, and how a person might concede even to demeaning conditions if the power of the other party is too great.

And as is illustrated in the video, if the power difference is too great sometimes even just complaining about the situation is enough to make it worse.

So keep in mind the parties with whom you are contracting, and what kind of power they may hold over you when drafting the agreement. Going into negotiations with power dynamics in mind will strengthen your position and help you avoid major concessions.

(photo: http://www.flickr.com/photos/claudiogennari)

In a previous post I introduced the concept of Force Majeure and how those clauses act to keep parties to a contract from being injured due to a breach caused by something outside their control. They’re easy enough to understand intellectually, but how often does an act of God really cause a breach of contract? They aren’t really necessary in real life, are they?

Turns out they are.

When the roof of the Metrodome in Minneapolis collapsed on December 12, 2010 due to a big snow storm, people thought that it would be repaired pretty shortly thereafter and everyone could get back to using it. Unfortunately, the latest reports are that it won’t be fully repaired until sometime in March. In the meantime, any group that had been planning to use it for an event is out in the cold.

Case in point: the Twin Cities has one of the largest Hmong populations in the United States. A Hmong American New Year celebration had been scheduled to take place in the Metrodome, and was expected to draw 40,000 people. Due to the roof collapse, though, the event had to be cancelled, at a loss of $35,000 “in advertising and nonrefundable deposits.”

I have not seen any of the vendor contracts for the Hmong American New Year, but this is precisely the situation in which force majeure clauses are important. If the organizers of the celebration had been able to negotiate force majeure clauses for the deposits, they could have relied on those to return those deposits rather than losing them.

This sort of situation affects all sorts of parties, though, including the operators of the Metrodome, the vendors hired to provide goods or services, and the companies who provide inventory to the vendors, among others. So hopefully they all had force majeure clauses in place to protect them. Without them, they could all still be bound to perform their contractual duties and be out a lot of money, effort, or both.

(photo: http://www.flickr.com/photos/gsfc)

Photo by extranoise

For all the time I spend on this site talking about being bound to a contract once it is signed, there are some times that even though you have signed a contract, you are not bound to it. The two situations I am going to go through today are Impossibility and Illegality.

Impossibility in contract law is not so much a matter of contracting to produce a squared circle (although that would likely qualify as impossible), but it involves changes of circumstance that make performance of the contractual duties impossible. If Jill pays Jack $100 to clean her car next weekend, but the car is stolen on Thursday, then it is impossible for Jack to clean the car and he would be excused from cleaning her car. Jill may have a claim to her $100 if she paid in advance, although those judgments are very fact-specific.

It’s important to note that in order for a contract to be impossible, it needs to be actually impossible, not just extremely difficult or costly. There is law on impracticability for those situations.

Illegality does not mean that the contract itself is illegal, but rather that the subject matter of the contract is illegal and the contract is automatically considered void and unenforceable. For instance, a court would never enforce a contract for a hit man to kill a target–either compensation for the hit man after completing the job and not getting paid, or specific performance if the hit man was paid but did not kill his mark. Murder is illegal, and any contract for committing murder is automatically void; it will not even be considered a contract and cannot be sued on based on breach of contract.

If you have other questions on contract concepts, drop me an email suggesting a future post. In the meantime, check out the Contract Basics section and see if it has already been addressed.