CHAPTER III.

ILLEGAL CONTRACTS.

1. By Illegal Contract we here mean one which, on account of its nature, the law forbids any one to make. Such a contract is wholly void. Any agreement to commit any illegal act is itself illegal. ANY CONTRACT WHICH HAS FOR

ITS PURPOSE THE FURTHERANCE OF ANY OBJECT CONTRARY TO JUSTICE OR COMMON MORALITY IS VOID. Thus any

betting, gambling, or bribery agreement is void. It would be impossible to give a complete list of illegal contracts, and therefore we will merely state in the following sections some of those which are more commonly met with in commercial life.

2. Why Void. The reason for the other six requisites of a binding agreement is private, (i.e. concerns only the particular parties to the contract,) viz., to save the other party from unjust loss; but with regard to the remaining requisite, legality, the reason is public, (i.e. concerns the public,) viz., because illegal contracts are considered as hurtful to the whole public. This will be seen as we examine each case. For this reason neither of the parties can enforce an illegal contract. The law considers it wholly vicious, and will help neither party, even though he has performed his part, or paid money.

3. Usury. In most of the States it is illegal to agree to pay or take more than a certain rate of interest, and in those States no such agreement can be enforced; i.e., a borrower cannot be compelled to pay more than a certain rate, even though he promises it.* This rate is different

*Usury is that part of the interest agreed to be paid for a loan of money which exceeds the rate allowed by law. Thus if the highest

in different States. The theory with regard to usury has been that it injured the community as a whole. We shall examine this subject more fully in Chapter XXXIV.

4. Against the Revenue Laws.-Revenue laws are laws laying taxes and duties to raise money for the support of the government. Manufacturers of certain articles are required to pay the government a certain amount for all they make; importers are required to pay also when they import certain articles. It is illegal to make or import these taxed articles without paying the duties. Therefore any agreement the object of which is to violate the revenue laws is void. Such are agreements to smuggle, or to make or sell any dutiable articles without paying the duty, or any agreements aiding in such a purpose. If duties are not paid it is a loss to the country as a whole. Contracts made in this country to violate the revenue laws of a foreign country are not illegal.

5. Giving up a Trade.—An agreement not to carry on anywhere a certain trade, business, or profession is illegal and void. The reason stated is that it is not considered best for the community that any one should wholly give up his trade. But this rule applies only to a general surrender; i.e., an agreement not to carry it on anywhere. An agreement by which one agrees not to exercise his calling within certain limits, as when one sells his business to another and agrees not to pursue the same business within a mile of that place, or within the same city, is not illegal.

6. Made on Sunday.-In many of the States a contract made on Sunday, or an agreement to do anything on Sunday, except such as relate to works of necessity and mercy, is illegal and void. But the rule on this subject differs in

rate allowed is ten per cent, and one agrees to give twelve, two per cent is usury.

the different States. The object is, for the good of all, to preserve the religious character of the day.

7. War. Usually contracts made with foreigners are as binding as any others. But when two nations are at war all commercial intercourse between them is prohibited. A contract made between a citizen of one nation and a citizen of another with which it is at war, is illegal and void. But each can trade with a neutral nation. Thus if England and the United States were at war, we could not trade with Englishmen; but if England and France were at war, we could trade with either.

8. Others. Each State makes such contracts illegal as it thinks best, and in every State there are some which have not been mentioned here. They are so many and so various in the different States that it is impossible to do more than refer to them here.

9. Illegal Consideration.—A contract, the consideration of which is a forbidden act or promise, is illegal and void. An illegal consideration is no consideration. Thus a promise to pay a bribe, or a note given in consideration for a person's promising not to prosecute an offender for a crime that has been committed,* or a promise to pay one creditor more than the rest if he will consent to a debtor's discharge, are wholly illegal and void. Both sides of a contract must be legal, or it is all void.

* To make such a promise is itself a crime, called compounding a felony. Merchants sometimes do this; promising not to prosecute thieves if they will return stolen property. Such a promise is alto gether illegal, either as a contract or as consideration, besides being punishable as a crime.

CHAPTER IV.

PERSONS NOT ABLE TO CONTRACT.

1. General Rule.-This has been stated to be that all natural persons may make any contract, except minors, lunatics and idiots. Corporations, which are artificial persons, may make such contracts as their charters or the law expressly gives them power to make (p. 72, sec. 6).

2. Minors. A person ceases to be a minor and is of age the day before his twenty-first birthday.* In a few States a female becomes of age earlier; in some at eighteen, in others when she marries. The reason that prior to that day minors can make no binding agreement is that as a rule they have not obtained sufficient knowledge or experience to enable them to understand what agreements will be to their advantage and what will not. The law in this way protects them against those who would take advantage of them. Thus it will be seen that it is dangerous to make any bargain with a minor, for he may at any time refuse to carry it out.

3. Minor may Enforce it.-But if the minor chooses to enforce the contract and do his part, he may, and then the other party will be bound to perform his part; i.e., A MINOR HAS HIS CHOICE, WHICH THE OTHER PARTY MUST ABIDE BY, TO CONSIDER THE CONTRACT BINDING OR VOID. Were this not so he would be unable to enforce an advantageous contract, and might be defrauded in that way.

4. Necessaries.-There is one exception to a minor's inability to contract. It is this: WHERE A MINOR BUYS

* For convenience we use throughout the book only the words denoting the masculine gender, but the law must be understood as eplying to the feminine as well.

THINGS NECESSARY OR APPROPRIATE FOR HIM IN HIS WAY OF LIFE, WHEN THEY ARE NOT SUPPLIED BY A PARENT, THE MINOR IS BOUND TO PAY FOR THEM. Necessaries include, (1) food, (2) clothing, (3) lodging, (4) medicine, and (5) education. The reason for this rule is the protection of the minor, for if a parent did not supply these things, and he could not contract for them himself, he might not be able to obtain them at all, even though he had property. But even in buying necessaries the minor is not bound to pay what he agrees to, but only what the articles are worth.

5. Ratification.-IF AFTER BECOMING OF AGE THE MINOR RATIFIES A CONTRACT MADE BEFORE, IT IS BINDING. It is the same as if it were made then. A ratification may be made in two ways: (1) by an express agreement to carry it out, or (2) in many cases by neglecting to disaffirm the contract after he becomes of age, and retaining all the benefit of it. This last rule applies especially to cases where a minor has bought property during his minority; if he retains it, or performs any act of ownership over it after reaching full age, it will be a ratification, and he must pay for it.

6. Lunatics and Idiots.-A lunatic is one who has lost his reason, an idiot one who never had any. THE CON

TRACTS OF A LUNATIC OR AN IDIOT CANNOT BE ENFORCED

AGAINST HIM; but the other party to the contract must fulfill it if the lunatic chooses to maintain it. Like the minor, he has his choice. To agree is an act of the mind, and therefore those deficient in mind cannot in reality agree. But the real and practical reason why a lunatic or idiot cannot contract, is the same as in the minor's case; viz., to protect him against designing persons. A person wholly intoxicated has lost the use of his mind for the time, and therefore the same rule applies to him. But all may make binding contracts for necessaries.