Contract Law

PART ONE – The Requirement for Legality of Purpose

1.  What is the basic rule about enforcement of a contract that violates a statute?    Give an example of a contract that lacks the required element of legality of purpose. 

2.  Please identify and explain the three exceptions to the rule that courts will not offer relief to the parties of illegal contracts.

3.  An unconscionable contract isn’t strictly illegal.   What is an unconscionable contract and why is such a contract unenforceable?  Give an example of an unconscionable contract. 

PART TWO – The Statute of Frauds

1. What is the purpose of the Statute of Frauds? What kinds of contracts must be in writing to be valid? What must be contained in “the writing” that is required?

2. If two parties make and fully perform a verbal contract to sell a car for $10,000, does that make the contract illegal? Must the transaction be canceled?  What happens to the transaction after it is performed?

 
PART THREE – Contract Interpretation

1.   Please identify and explain tools of interpretation used by courts when called upon to determine the terms of a contract.

2.  Read the attached court opinion titled Leonard v. Pepsico, Inc. Before you read the case, you might find it interesting to watch the Pepsi commercial that gave rise to the case. It is embedded below this assignment and also located at this link: http://www.youtube.com/watch?v=U_n5SNrMaL8

Court Opinion – Leonard v. Pepsico, Inc. 
(Right click and select “Open in New Window”)

This case is about a plaintiff who tries to redeem Pepsi Points for a Harrier Jet. You may find it a little confusing because there is more than one issue in the case. For our purposes, pay attention to the contract issue.

After reading the case, answer the following questions:

     A. What is the single most compelling reason the court gave for deciding this case in favor of the defendant and against the plaintiff?

     B. Do you think the case might have been decided differently if the last item featured in the commercial was a Jaguar XJS for 800,000 Pepsi points? Why or why not?

     C. Is there any social value to a case like this? This case was decided on a summary judgment (similar to a Motion to Dismiss and explained on pages 62-63 of your textbook.)  Do you agree with the Court’s ruling to grant the defendant’s motion for summary judgment?  How might this affect your opinion about frivolous lawsuits?