Exam 12: Legality

Mark works as a bartender at The Little Nipper,a local bar.Under state law,bartenders are required to be licensed.The licensing requires filling out an application and submitting a $50 application fee.The application does not require any special education or experience,just the $50 fee.Craig enters Mark's bar,orders a round of drinks for the house,then notices that Mark's license is not on display behind the bar.Craig learns that Mark is not licensed and refuses to pay for the round of drinks.The Little Nipper sues.What result?

Wendell,new to the area,selects a doctor from the telephone book and visits that doctor to have a splinter extracted.Unbeknownst to Wendell,the doctor has never passed the state licensing exams.Later,when Wendell discovers the truth,he refuses to pay his bill.If the doctor sues for recovery of the fee,will the court support the doctor's claim?

To raise revenues,the City of St.Cloud required restaurants to purchase a special permit if they wanted to serve food in an open-air patio.(This is in addition to he sanitation inspection license. )While at Hola Taco,a restaurant in St.Cloud,a customer notices that Hola Taco's permit expired.This mean the customer is not legally required to pay for her food.

In the case of Worldwide Insurance v.Klopp,the Supreme Court of Delaware found that:

An agreement may violate public policy even if the agreement does not require a party to commit a crime,tort,or violate a statute.

E-mation,Inc hires Marvin to steal trade secrets from one of its competitors for $10,000.Marvin demands half of the money up front.E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets.E-mation sues Marvin for the return of the $5000.What will the court do with this contract?

To be valid,an agreement not to compete must be ancillary to a legitimate bargain.

In 1970,Continental Airlines agreed to buy a number of DC-10 airplanes from McDonnell Douglas Corporation (MDC).Their contract included a limited warranty in which MDC undertook certain servicing obligations and an exculpatory clause in which Continental waived "all other remedies" against MDC.On March 1,1978,one of these DC-10s was nearing takeoff at Los Angeles International Airport when the two front tires of its left-side landing gear blew out.The pilot aborted the takeoff,but the uncushioned landing gear tore through the tarmac and broke away from the plane.This ruptured the left wing fuel tank,which burst into flames.The emergency escape slides failed,apparently due to the heat of the fire.Some passengers evacuated through the copilot's window,others jumped from the exits.Four passengers died,and over 70 suffered injuries.The plane was destroyed.It should be noted that the exculpatory clause did not prevent the passengers from suing Continental and/or MDC.Continental sued MDC and MDC defended based on the exculpatory clause.Is this type of clause enforceable? Discuss exculpatory clauses,particularly the one involved here.

Rudolph overhears Macy's plans to go skydiving over spring break.Not really knowing Macy,but figuring it's worth a chance,Rudolph rushes out and buys an insurance policy for $100,000 on Macy's life.Macy does in fact meet her demise jumping out of the airplane.Rudolph can collect the $100,000.

Barb has been a children's day care provider for several years in the small town of Sallton.She has decided to give it all up and move to the big city for excitement and adventure.She sells her business to Ken,agreeing not to open a competing business within five miles of Sallton for a period of nine months.After five months of the big city life,Barb is broke and moves back to Sallton.She opens a small day care business.Ken sues on the noncompete clause.What is the most likely result?

Barbara,a skilled welder,was hired at Mainco Enterprises for a welding position.She was asked to sign noncompete clauses limiting future employment if she left Mainco.A court would be very likely to enforce the noncompete clause unless the time or geographic restriction is unreasonable.

John was a licensed physician in Michigan.When he retired to Florida,he started providing medical services to the people in his condo,relying on his Michigan license.Isaac,John's next-door neighbor,owed John $2000 for medical services.John will be able to enforce the contract he made with Isaac.

Cherise contacted her insurance agent and said she was interested in purchasing several life insurance policies:(a)a policy on her own life for $100,000,naming her son and daughter as beneficiaries;(b)a policy on her neighbor's life for $100,000,since she had observed him engaging in reckless behavior,naming herself as beneficiary;(c)a $5,000 policy on another neighbor to cover a loan Cherise made to him,naming herself as beneficiary;and (d)a $250,000 policy on her business partner,naming herself as beneficiary.Discuss the legality of each of these potential contracts.

Public policy means the law that comes from the:

An exculpatory clause is generally unenforceable when:

Zach sold a restaurant to Shane for $295,000.As part of the agreement,Zach promised not to open another restaurant business for three years within a 50-mile radius of the one sold.Is this agreement enforceable against Zach?

When Mohammed was hired by Pomico,Inc. ,he signed the following agreement,"Upon termination of my employment with Pomico,I agree not to work for a competing company within 30 miles of Pomico's headquarters for one year." This agreement,important to protecting secret information developed in the employer's business,is:

If a contract is made with a person required by law to hold a license,and the purpose of the license is protection of the public,the contract made by an unlicensed person will generally be unenforceable.

To be valid,a noncompete clause must be:

Larry has the largest pizza business in the city.He learns that Henry is thinking of opening a competing pizza and pasta delivery business.Larry gives Henry $25,000 to not open his proposed business in the same city.Which statement is correct?