Key Takeaways

  • Contracts that violate public policy are void and unenforceable.
  • Examples include agreements that encourage illegal acts, obstruct justice, or promote corruption.
  • Public policy is determined by laws and judicial precedent, not public opinion.
  • Additional types of unenforceable agreements include those that restrain marriage, restrict trade unreasonably, or encourage immoral conduct.
  • Courts examine societal harm, fairness, and legality to determine if an agreement violates public policy.

What contracts are considered to be contrary to public policy? When trying to answer this question, you would need to examine general principles instead of examining a contract's individual terms.

Contracts Opposed to Public Policy

When a contract is considered to be contrary to public policy, the contract will not be enforceable. General principles are used to determine if a contract opposes public policy, which is why many people find this issue very complicated. When questions of public policy arise, courts must be very careful in their decisions.

An agreement that opposes public policy or law will be void. It is not possible to expressly forbid acts described in the contract, however. The reason that it's hard to define which contracts are contrary to public policy is that applying public policy takes place on a case-by-case basis.

Some general agreements, however, could be considered against public policy, such as:

  • Contracts that would cause injury to the public services.
  • An agreement involving public matters that would corrupt a private citizen.
  • Contracts that will obstruct or pervert justice.
  • Contracts that would promote litigation.

Some acts are not expressly forbidden by law but their nature is so mischievous that they cannot be included in a legal contract.

A contractual condition could be opposed to public policy if the state has an interest in preventing the condition from being performed. The view of contracts that are contrary to public policy has changed over time. For example, a contractual condition that may be upheld today could very well have been opposed to public policy in the past.

In most cases, courts will assist someone who has been harmed by a breach of contract if they can prove that a breach has actually occurred. The exception to this rule is if the contract is contrary to public policy. If the court finds that a contract has violated a law or policy, it will not help the parties to the contract. If a contract encourages an immoral act, such as committing a crime, it will be considered to contradict public policy and will not be upheld.

Common Types of Agreements Against Public Policy

Some contracts are unenforceable not because of a defect in formation but because they contradict public welfare or societal norms. Examples of agreements against public policy include:

  • Restraints on Marriage: Any agreement that interferes with the right to marry is generally void. For instance, contracts that prohibit a person from marrying for a certain period or marrying a specific individual are unenforceable.
  • Unreasonable Restraints of Trade: While some non-compete clauses are valid, those that excessively restrict an individual's ability to work or conduct business may be void for being overly broad in time, geography, or scope.
  • Contracts Encouraging Divorce or Separation: Agreements offering money or other benefits in exchange for a divorce or separation are considered contrary to the institution of marriage and public policy.
  • Contracts to Commit a Crime or Tort: These include agreements to perform illegal acts, such as contracts to distribute controlled substances or engage in fraudulent activity.
  • Contracts That Are Grossly Unfair or Unconscionable: Courts may invalidate contracts where the terms are so one-sided that they shock the conscience.

These examples demonstrate that enforceability often hinges on whether the contract promotes justice, fairness, and public welfare.

What Is Public Policy?

The Policy of the Law is another name for public policy. Public policy can be hard for many people to understand, as it has no set legal definition. What is considered public policy can change depending on the time and the needs of the people. Many courts hold a conservative view of public policy, believing that public policy is determined by judicial decisions and laws and not the opinions of people.

Basically, a contract or an act is thought to be contrary to public policy if it results in a breach of law, harms citizens, or causes injury to the state. Broadly, public policy means that courts will occasionally find a contract invalid because it is against the public good.

Normally, the court's role is to enforce contracts, so negating contracts based on public policy is an exception to their traditional function. Only the courts are responsible for interpreting public policy.

How Courts Determine Public Policy Violations

When evaluating whether a contract is void due to public policy concerns, courts typically consider:

  • Legislative Intent: Whether the agreement contradicts statutes or established legal principles.
  • Judicial Precedent: Past court decisions help determine if similar contracts have been deemed void.
  • Impact on Society: Courts assess whether enforcement would harm the public interest or undermine social institutions.
  • Moral Standards: While courts avoid enforcing moral codes, contracts promoting immorality (e.g., sexual services contracts) may be found unenforceable.

Public policy can evolve, so what may be permissible at one point in time could be deemed unacceptable later. This fluidity requires courts to carefully balance legal principles with societal values.

Trading With Enemies

When someone conducts trade with enemies of the state, this will always be considered contrary to public policy. Contracts involving trade with enemies are illegal and will not be enforced by the court.

This issue can become complicated, however, if a contract is entered into during a time of peace and then a war occurs. If this happens, usually one of two results will occur. First, the agreement will be suspended until the conflict is over. Second, the contract will be dissolved.

Traffic in Public Office and Ending Prosecution

Another example of an agreement that is against public policy would be an arrangement to obtain a government job or title through corrupt means. Such a contract would be unenforceable. Such a contract is considered to be against public policy because if this practice were allowed, it would increase corruption and cause public services to be inefficient and unreliable.

For example, if you pay a public servant a certain amount of money to retire so that you can take over their job, this agreement would be void. It is also illegal to make an agreement to end criminal prosecution in exchange for a certain amount of money. Once a complaint has been filed, no arrangement to withdraw the complaint for consideration can be made.

Frequently Asked Questions

1. What is an agreement against public policy? It is a contract whose enforcement would harm the public interest or contradict laws and accepted moral standards. Such contracts are void and unenforceable.

2. Can a contract be legal but still be against public policy? Yes. Even if a contract doesn’t explicitly violate a law, it may be unenforceable if it promotes harm, unfairness, or societal disruption.

3. Is a non-compete agreement considered against public policy? Only if it is unreasonably restrictive. Courts assess whether the terms are necessary to protect legitimate business interests without unduly limiting individual freedom to work.

4. Can a contract be partly enforceable and partly void? Yes. Courts may sever the unenforceable portion of a contract if it can be removed without affecting the overall intent and fairness of the agreement.

5. Who decides if a contract violates public policy? Courts have the authority to interpret and apply public policy based on legislation, precedent, and societal norms. Their decisions are context-specific and case-dependent.

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