A contract may be ruled to be illegal by any court of law. Illegality can become an issue even if the normal requirements of acceptance of offers, consideration, contractual capacity, are present. Illegal contracts typically do not result in any liability for the involved parties. The courts may rule an illegal contract exists regardless of whether or not the parties involved in the suit raise the issue, even if the two parties believe the contract to be legal.

A severable or divisible contract may be formed by the parties to the contract or may result from actions of the courts. The parties can create a severable contract by including a severence clause into the original contract. A severance clause is a clause which states that if there is one other contractual clause that would cause the contract to be considered illegal, then the offending phrase should be stricken from the contract, so long as the removal of the clause does not substantially alter the original nature of the contract. 

Divisible contracts are similar contracts entered into by the same parties which have similar terms but can be completed independently of each other. A court may form a severable contract by utilizing a blue pencil test. If the offending phrase in a contract can be removed from the contract without enacting any change besides turning an illegal contract into a legal one, then the change passes the blue pencil test.

Fraud is voidable by the injured party. The justifiable reliance cannot be easily disproven and must constitute a claim that a reasonable person would believe. A promisee who entered into a contract with a car salesman that claimed that the car in the contract could go one hundred miles per gallon would not be able to claim justifiable reliance on the salesman’s claim because the claim is unjustifiable. 

The claim that a car is brand new, despite extensive and obvious damage to the car, would not be grounds for justifiable reliance by an individual claiming the salesman duped them. Justifiable reliance only applies to instances where the injured party relied upon a claim that could not be easily disproved.

A person could claim justifiable reliance if they bought a car they believed was in perfect working order but upon driving the car home discovered extensive body damage, a faulty ignition system, failing brakes, or other serious defects in the car. In such a situation, the person may be able to claim that they were damaged by a justifiable reliance on the salesman’s claims.

The party claiming that they were induced to enter into a contract due to justifiable reliance on misrepresentations by the other party must be able to show that their reliance was not based on something that they could reasonably be expected to discover on their own.

 

Blue laws are a diminishing category of law in the United States. Despite being present in thirty-one states, the exact contents of each blue law varies from jurisdiction to jurisdiction. A law is classified as a blue law if it restricts commercial activity on a particular day. 

Normally a blue law prohibits the ability of a business to operate on a Sunday. The prohibition on commerce on Sunday derives from Christian religious tradition. As a result, blue laws in some states instead preclude businesses from being open on consecutive weekend days out of respect for different Sabbath observances by different religious groups.

Most states that contain blue laws apply them to the sale of alcohol. Alcohol sales may be restricted from being sold at all on Sundays. In blue law states which do not prohibit the sale of alcohol entirely on Sunday, limitations may be placed upon the hours during which alcohol may be sold. These blue law restrictions typically preclude the sale of alcohol to hours during which church sessions would not be held.

A blue law can also restrict the sale of alcohol between certain hours during the week. Restaurants in some blue law jurisdictions can obtain permits to allow the sale of alcoholic beverages so long as a particular percentage of their revenues come from food sales.

Depending on the State, towns may be allowed to opt out of observing blue laws. Some states allow local jurisdictions to opt in or out of blue laws by a majority vote. Other states restrict the ability of a local jurisdiction to opt out of blue laws based on particular criteria. In South Carolina, for example, an area can only opt out once it can demonstrate a certain level of sales tax receipts.

Blue laws may be supported for a variety of reasons. Car dealerships sometimes support blue laws because it allows them to afford their employees a day off without being concerned that a competitor is open.

There may not be support among voters to repeal blue laws. This is the situation in Bergen County in New Jersey, the only part of New Jersey with blue laws that prohibit commercial activity on Sundays. Despite pressure from the State Government to join the rest of the State in repealing blue laws, some Bergen County residents enjoy the fact that the large commercial centers in the county are relatively empty and peaceful on Sundays.

As a legal concept, duress has a long tradition. Duress is related to the concept of undue influence. Duress exists when there is a threat of bodily harm, and the threat is immediate and cannot be avoided. Duress also exists in criminal law proceedings. In order for duress to exists in a contract law court proceeding there must be a wrongful or illegal threatened act. 

A contract also cannot normally be made voidable because one of the parties is suffering from economic duress. Claims of duress are filed by parties to a contract seeking to prove that their assent to a contract was not genuine, and thus did not fulfill the essential requirements needed to form a contract.

A contract cannot be invalidated by a party to that contract who claims duress because the other party threatened to sue them for a larger amount, because the filing of a law suit is a legally permitted action. A claim of duress is distinct from instances where the consideration offered by one of the parties is the forbearance of an action. 

Duress can be invoked if the party claiming they were acting under duress was in fear for their safety. An example of duress would be if a person is told to sign a contract or their family or they themselves would be harmed. This qualifies as duress because the consideration of forbearance is to forbear from doing an illegal act. If it is a wrongful or illegal threatened act then it constitutes an instance of duress.

A claim of economic duress is not usually permitted. Individuals are usually only able to successfully invoke a claim of economic duress if the other party in the contract is the immediate cause of the economic duress. Sometimes the courts permit a claim of economic duress to be filed in contracts which involve one party claims they are suffering from economic difficulties which are not caused by the other party in the contract, although such claims of economic duress are not usually accepted. 

Economic duress does not exist simply if exorbitant prices are charged for goods or a service. However, if the high prices are charged by the same party that created the need for the good or service then a claim of economic duress may be permitted by the courts.

If the individual claiming the contract was formed under duress is able to prove their claim, then the courts may declare the contract voidable. 

Non-fraudulent misrepresentation can take one of two forms: innocent misrepresentation or negligent misrepresentation. Negligent misrepresentation is considered in the eyes of the law to contain the same level of culpability as fraudulent misrepresentation.

Misrepresentation that is negligent in nature is treated by the courts in the same way as a fraudulent misrepresentation. Negligent misrepresentation occurs when a party to a contract does not carry out a reasonable effort to ensure that their claims as the material information at the heart of the contract are true.

If one of the parties to the contract in question does not act with the professionalism that would reasonably be expected from an individual in that position, and the other party relies on that professionalism when entering into the contract, then negligent misrepresentation may be determined by the courts to have happened.

Fraudulent misrepresentation may be claimed by a party attempting to have a contract declared void if three different criteria are met. The first is that there is an occurrence intended to create justifiable reliance on a fraudulent misrepresentation. 

The party seeking to have a contract invalidated must show that they entered into the contract due to a justifiable reliance on the other party’s fraudulent misrepresentation. Justifiable reliance only becomes an issue if the claim is not readily apparent to be false. Failure to investigate a claim may be used to support a claim of justifiable reliance. The material misrepresentation must be made about an area that the injured party had no way of proving and thus was forced to rely on the other party’s statement.

A mistake of fact which affects the genuineness of the assent given to the terms of a contract may be bilateral or unilateral. Mistakes of fact apply when the party concerned was operating under a mistaken understanding of the facts involved in the contract.

A mistake of fact is unilateral when only one party is mistaken. A bilateral mistake of fact occurs when both parties to the contract are operating under a mistaken reality. Bilateral mistakes are also known as mutual mistakes or common mistakes.

A mistake of fact that is unilateral in nature is not normally a reason to set aside a contract or a reason that will allow a plaintiff in a civil trial to seek damages. A unilateral mistake of fact will result in an enforceable voidable contract.

For example, a contract would be voidable at Luke’s discretion if Ben took advantage of Luke’s unilateral mistake regarding the purchase of a painting Luke thought was genuine. If Ben did not know that Luke thought he was buying the genuine painting, then Luke’s unilateral mistake would not prevent the contract from being enforceable.

A bilateral mistake would result in a contract that could be voided by both individuals in the event that Luke and Ben both believed the forgery was a genuine work by Dali. If Ben believed Luke intended to buy an artificial Dali painting, and Luke believed Ben was selling a genuine work by Dali, a mutual mistake has again been made because there was no intention to defraud and both parties made a mistake of fact.

Mistakes of fact should not be confused with mistakes of value. A mistake of value would occur if Jim sold Jack a random painting that he believed had only a slight value for $50. If Jim later learns that the painting was in fact done by a famous artist and worth $500, he cannot sue Jack to make up the $450. This sort of mistake is not permitted because the value of an object is not a fact. It can change. In order for a mistake to provide the basis to overturn a contract, the mistake must be of a fixed and provable nature.