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Chapter 13

BUL3130 Chapter Notes - Chapter 13: Blue Law, Usury


Department
Business Law
Course Code
BUL3130
Professor
shupp
Chapter
13

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Legal Environment of Business Chapter 13 Illegal Bargains
13.1 Violations of Statutes
o Courts will not enforce an agreement declared illegal by statute
An agreement to violate a statute prohibiting crimes is unenforceable
An agreement that is induced by criminal conduct will not be enforced
o Licensing Statutes
Every jurisdiction has laws requiring a license for those who engage in certain trades,
professions, or businesses
Some licensing statutes mandate schooling or an exam, financial responsibility or good moral
character
Statute may provide that an unlicensed person engaged in a business or profession for which an
unlicensed person engaged in a business or profession for which a license is required shall not
recover for services rendered
Regulatory statute person cannot recover for professional services unless he has the required
license
If law is for revenue purposes only, agreements for such services are enforceable
Regulatory license a measure designed to protect the public against unqualified persons
Those issued under statutes prescribing standards for those wishing to practice law or
medicine
Revenue license does not seek to protect against incompetent or unqualified practitioners but
simply to furnish revenue
o Gambling Statutes
In a wager, one party should win and other lose depending on the outcome of an event in which
their sole iterest arises fro the possiility of suh gai or loss
Courts generally refuse to recognize the enforceability of gambling agreement
o Some states permit certain kinds of regulated gambling
Wagering conducted by government agencies, state operated lotteries, has come to an
important source of public revenues
In a wager, the parties contemplate gain through chance
o In an insurance contract, they seek to distribute possible loss
o Usury Statute
Usury Statute a law establishing a maximum rate of permissible interest for which a lender and
borrower of money may contract
Recent trend is to limit or relax usury statutes
Typically, are general in their application, specified types of transactions are exempted
Some states impose no limit on the rate of interest that may be charged on loans to
corporations
Permit parties to contract for any rate of interest on loans made to individual
proprietorship or partnerships for the purpose of carrying on a business
o Not many protections remaining for typical consumer transactions
Number of States have exempted specific lenders,
Installment loan laws permit eligible lenders a return on installment loans that is higher than
the applicable general interest statute would permit
Generally, include small consumer loans, corporate loans, loans by small lenders, etc.
For transaction to usurious, the courts require evidence
Loan or forbearance of money which is repayable absolutely and in all events for which
an interest charge is exacted in excess of the interest rate allowed by law
In a few states, lender forfeits both principal and interest
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